-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UrKqQfAp/rzdQzmOL7CISQ+qvb2NS09xfpidCoaKEB27mgA8FqJjQJ+i6/s7WTci tQUiDSKQAoM2ohy3PyIiaQ== 0000950136-04-002539.txt : 20040811 0000950136-04-002539.hdr.sgml : 20040811 20040810200224 ACCESSION NUMBER: 0000950136-04-002539 CONFORMED SUBMISSION TYPE: POS AM PUBLIC DOCUMENT COUNT: 10 FILED AS OF DATE: 20040811 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ACE GAMING LLC CENTRAL INDEX KEY: 0001269976 IRS NUMBER: 542131351 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: POS AM SEC ACT: 1933 Act SEC FILE NUMBER: 333-110485-01 FILM NUMBER: 04965614 BUSINESS ADDRESS: STREET 1: C/O SANDS HOTEL & CASINO STREET 2: INDIANA AVE & BRIGHTON PARK CITY: ATLANTIC CITY STATE: NJ ZIP: 08401 BUSINESS PHONE: 6094414000 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ATLANTIC COAST ENTERTAINMENT HOLDINGS INC CENTRAL INDEX KEY: 0001269977 STANDARD INDUSTRIAL CLASSIFICATION: HOTELS & MOTELS [7011] IRS NUMBER: 542131349 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: POS AM SEC ACT: 1933 Act SEC FILE NUMBER: 333-110485 FILM NUMBER: 04965613 BUSINESS ADDRESS: STREET 1: C/O SANDS HOTEL & CASINO STREET 2: INDIANA AVE & BRIGHTON PARK CITY: ATLANTIC CITY STATE: NJ ZIP: 08401 BUSINESS PHONE: 6094414000 POS AM 1 file001.txt POST-EFFECTIVE AMENDMENT NO. 1 TO FORM S-4 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 3, 2004 REGISTRATION NO. 333-110485 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------- POST-EFFECTIVE AMENDMENT NO. 1 TO FORM S-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 -------------- ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC. ACE GAMING, LLC (Exact name of each registrant as specified in its charter) DELAWARE 7011 54-2131349 NEW JERSEY 7011 54-2131351 (State or Other Jurisdiction (Primary Standard (I.R.S. Employer of Incorporation Industrial Classification Identification Number) or Organization) Code Number) C/O SANDS HOTEL & CASINO INDIANA AVENUE & BRIGHTON PARK ATLANTIC CITY, NEW JERSEY 08401 (609) 441-4000 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) PATRICIA M. WILD VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY C/O SANDS HOTEL & CASINO INDIANA AVENUE & BRIGHTON PARK ATLANTIC CITY, NEW JERSEY 08401 (609) 441-4432 (Name, address, including zip code, and telephone number, including area code, of agent for service) -------------- WITH A COPY TO: JOEL A. YUNIS, ESQ. WAYNE A. WALD, ESQ. KATTEN MUCHIN ZAVIS ROSENMAN 575 MADISON AVENUE NEW YORK, NEW YORK 10022 (212) 940-8800 -------------- Approximate date of commencement of proposed sale to the public: AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT IS DECLARED EFFECTIVE AND THE CONDITIONS TO THE CONSUMMATION OF THE OFFER DESCRIBED HEREIN HAVE BEEN SATISFIED OR, TO THE EXTENT PERMITTED, WAIVED. -------------- If any of the securities being registered on this Form are to be offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. [ ] If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] -------------- THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY DETERMINE. -------------- THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PRELIMINARY PROSPECTUS IS NOT AN OFFER TO SELL, NOR DOES IT SEEK AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED. ================================================================================ Explanatory Note This Post-Effective Amendment No. 5 to Registration Statement 333-110485 is filed in accordance with the undertakings of the Registrants contained in Item 22 to the Registration Statement. The purpose of this Post-Effective Amendment No.5 is to include Exhibits 4.4, 4.6, 4.7 and 10.1, as revised, and Exhibits 4.5, 4.8, 10.2, 10.3 and 10.4. PART II. INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES a. Exhibits Exhibit Number Description of documents ------ ------------------------ 3.1** Certificate of Incorporation of Atlantic Coast Entertainment Holdings, Inc., filed October 31, 2003 (Incorporated herein by reference to Annex A to the proxy statement and prospectus, which is a part of this registration statement). 3.2** Certificate of Formation of ACE Gaming, LLC, filed November 5, 2003. 3.3** By-Laws of Atlantic Holdings (Incorporated herein by reference to Annex B to the proxy statement and prospectus, which is a part of this registration statement). 4.1** Specimen form of Atlantic Holdings' Common Stock certificate. 4.2** Operating Agreement of ACE Gaming, dated November 5, by Atlantic Holdings. 4.3** Amended and Restated Indenture, dated as of October 12, 2001, among GB Property Funding Corp., as issuer, GB Holdings, Inc. and Greate Bay Hotel and Casino, Inc., as guarantors, and Wells Fargo Bank Minnesota, National Association, as trustee (Incorporated herein by reference to Annex E to the proxy statement and prospectus, which is a part of this registration statement). 4.4 Amendment No.1 to Amended and Restated Indenture, dated as of July 22, 2004, among GB Property, as issuer, GB Holdings and Greate Bay Hotel, as guarantors, and Wells Fargo Bank, National Association, as trustee, and Form of Second Amended and Restated Indenture, dated as of July 22, 2004, among GB Holdings, as obligor, and Wells Fargo Bank, National Association, as trustee. 4.5 Second Amended and Restated Indenture, dated as of July 22, 2004, among GB Holdings, as obligor, and Wells Fargo Bank, National Association, as trustee. 4.6 Indenture, dated as of July 22, 2004, among Atlantic Holdings, as issuer, ACE Gaming, as guarantor, and Wells Fargo Bank, National Association, as trustee. 4.7 Warrant Agreement, dated as of July 22, 2004, between Atlantic Holdings and American Stock Transfer and Trust Company. 4.8 Registration Rights Agreement, dated as of July 22, 2004, between Atlantic Holdings and the Signatories listed therein. 5.1** Opinion of Katten Muchin Zavis Rosenman. 8.1** Form of Tax Opinion of Katten Muchin Zavis Rosenman. 10.1 Contribution Agreement, dated as of July 22, 2004, among GB Holdings, Greate Bay Hotel, Atlantic Holdings and ACE Gaming 10.2 Pledge and Security Agreement, dated as of July 22, 2004, among Atlantic Holdings, ACE Gaming and certain subsidiaries of Atlantic Holdings, as Guarantor, and Wells Fargo Bank, National Association, as trustee. 10.3 Assignment of Leases, dated as of July 22, 2004, between ACE Gaming and Wells Fargo Bank, National Association. 10.4 Mortgage, Fixture Filing and Security Agreement, dated as of July 22, 2004, between ACE Gaming and Wells Fargo Bank, National Association. 10.5** Commitment Letter from Ealing Corp. to GB Holdings, dated as of January 30, 2004. 10.6** Letter from GB Holdings to Ealing Corp. dated as of March 23, 2004. 10.7** Letter from GB Holdings to Ealing Corp. dated as of April 20, 2004. 12.1** Statement regarding computation of ratios. 21.1** List of Subsidiaries of Atlantic Holdings. 23.1** Consent of Independent Registered Public Accounting Firm. 23.2** Opinion of Katten Muchin Zavis Rosenman (included in Exhibit 5.1). 24.1** Powers of Attorney. 99.1** Opinion of Libra Securities, LLC (Incorporated herein by reference to Annex H to the proxy statement and prospectus, which is a part of this registration statement). - -------------- ** Previously filed. SIGNATURES Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Atlantic City, New Jersey, on August 3, 2004. ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC. By: /s/ RICHARD P. BROWN --------------------------------------- Name: RICHARD P. BROWN Title: Chief Executive Officer Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons in the capacities indicated on August 3, 2004. SIGNATURE TITLE /s/ RICHARD P. BROWN Chief Executive Officer (Principal - --------------------------- Executive Officer) RICHARD P. BROWN /s/ DENISE BARTON Vice President and - --------------------------- Chief Financial Officer DENISE BARTON /s/ MARTIN HIRSCH* Director - --------------------------- MARTIN HIRSCH /s/ JOHN P. SALDARELLI* Director - --------------------------- JOHN P. SALDARELLI /s/ MICHAEL L. ASHNER* Director - --------------------------- MICHAEL L. ASHNER /s/ HAROLD FIRST* Director - --------------------------- HAROLD FIRST /s/ AUGUSTE E. RIMPEL, JR.* Director - --------------------------- AUGUSTE E. RIMPEL, JR. - -------------------------------------------------------- *By: /s/ RICHARD P. BROWN ------------------------------------------------- RICHARD P. BROWN, as Attorney-in-Fact SIGNATURES Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Atlantic City, New Jersey, on August 3, 2004. ACE GAMING, LLC By /s/ RICHARD P. BROWN ---------------------------- Name: RICHARD P. BROWN Title: Chief Executive Officer Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons in the capacities indicated on August 3, 2004. SIGNATURE TITLE /s/ RICHARD P. BROWN Chief Executive Officer (Principal - --------------------------- Executive Officer) RICHARD P. BROWN /s/ DOUGLAS S. NIETHOLD Vice President, Finance and - --------------------------- Chief Financial Officer (Principal DOUGLAS S. NIETHOLD Accounting Officer) /s/ MARTIN HIRSCH* Director - --------------------------- MARTIN HIRSCH /s/ JOHN P. SALDARELLI* Director - --------------------------- JOHN P. SALDARELLI /s/ MICHAEL L. ASHNER* Director - --------------------------- MICHAEL L. ASHNER /s/ HAROLD FIRST* Director - --------------------------- HAROLD FIRST /s/ AUGUSTE E. RIMPEL, JR.* Director - --------------------------- AUGUSTE E. RIMPEL, JR. - ---------------------------------------------------------- *By: /s/ RICHARD P. BROWN --------------------------------------------------- RICHARD P. BROWN, as Attorney-in-Fact Exhibit Number Description of documents 3.1** Certificate of Incorporation of Atlantic Coast Entertainment Holdings, Inc., filed October 31, 2003 (Incorporated herein by reference to Annex A to the proxy statement and prospectus, which is a part of this registration statement). 3.2** Certificate of Formation of ACE Gaming, LLC, filed November 5, 2003. 3.3** By-Laws of Atlantic Holdings (Incorporated herein by reference to Annex B to the proxy statement and prospectus, which is a part of this registration statement). 4.1** Specimen form of Atlantic Holdings' Common Stock certificate. 4.2** Operating Agreement of ACE Gaming, dated November 5, by Atlantic Holdings. 4.3** Amended and Restated Indenture, dated as of October 12, 2001, among GB Property Funding Corp., as issuer, GB Holdings, Inc. and Greate Bay Hotel and Casino, Inc., as guarantors, and Wells Fargo Bank Minnesota, National Association, as trustee (Incorporated herein by reference to Annex E to the proxy statement and prospectus, which is a part of this registration statement). 4.4 Amendment No.1 to Amended and Restated Indenture, dated as of July 22, 2004, among GB Property, as issuer, GB Holdings and Greate Bay Hotel, as guarantors, and Wells Fargo Bank, National Association, as trustee, and Form of Second Amended and Restated Indenture, dated as of July 22, 2004, among GB Holdings, as obligor, and Wells Fargo Bank, National Association, as trustee. 4.5 Second Amended and Restated Indenture, dated as of July 22, 2004, among GB Holdings, as obligor, and Wells Fargo Bank, National Association, as trustee. 4.6 Indenture, dated as of July 22, 2004, among Atlantic Holdings, as issuer, ACE Gaming, as guarantor, and Wells Fargo Bank, National Association, as trustee. 4.7 Warrant Agreement, dated as of July 22, 2004, between Atlantic Holdings and American Stock Transfer and Trust Company. 4.8 Registration Rights Agreement, dated as of July 22, 2004, between Atlantic Holdings and the Signatories listed therein. 5.1** Opinion of Katten Muchin Zavis Rosenman. 8.1** Form of Tax Opinion of Katten Muchin Zavis Rosenman. 10.1 Contribution Agreement, dated as of July 22, 2004, among GB Holdings, Greate Bay Hotel, Atlantic Holdings and ACE Gaming 10.2 Pledge and Security Agreement, dated as of July 22, 2004, among Atlantic Holdings, ACE Gaming and certain subsidiaries of Atlantic Holdings, as Guarantor, and Wells Fargo Bank, National Association, as trustee. 10.3 Assignment of Leases, dated as of July 22, 2004, between ACE Gaming and Wells Fargo Bank, National Association. 10.4 Mortgage, Fixture Filing and Security Agreement, dated as of July 22, 2004, between ACE Gaming and Wells Fargo Bank, National Association. 10.5** Commitment Letter from Ealing Corp. to GB Holdings, dated as of January 30, 2004. 10.6** Letter from GB Holdings to Ealing Corp. dated as of March 23, 2004. 10.7** Letter from GB Holdings to Ealing Corp. dated as of April 20, 2004. 12.1** Statement regarding computation of ratios. 21.1** List of Subsidiaries of Atlantic Holdings. 23.1** Consent of Independent Registered Public Accounting Firm. 23.2** Opinion of Katten Muchin Zavis Rosenman (included in Exhibit 5.1). 24.1** Powers of Attorney. 99.1** Opinion of Libra Securities, LLC (Incorporated herein by reference to Annex H to the proxy statement and prospectus, which is a part of this registration statement). - -------------- ** Previously filed. EX-4.4 2 file002.txt AMENDMENT TO INDENTURE ================================================================================ GB PROPERTY FUNDING CORP., as Issuer, GB HOLDINGS INC. AND GREATE BAY HOTEL AND CASINO, INC., as Guarantors, and WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee -------------- AMENDMENT NO. 1 Dated July 22, 2004 to Amended and Restated Indenture Dated as of October 12, 2001 -------------- $110 Million 11% Notes Due 2005 ================================================================================ AMENDMENT NO. 1, dated July 22, 2004 ("Amendment No. 1"), to the Amended and Restated Indenture, dated as of October 12, 2001 (the "Indenture"), among GB Property Funding Corp. (herein called the "Company"), GB Holdings, Inc. (herein called "Holdings") and Greate Bay Hotel and Casino, Inc. (herein called "GBHC," and, together with Holdings, herein called the "Guarantors"), each of which is a corporation duly organized and existing, in the case of the Company and Holdings, under the laws of the State of Delaware, and in the case of GBHC, under the laws of the State of New Jersey, and each having its principal office c/o Sands Hotel and Casino at Indiana Avenue & Brighton Park, Atlantic City, New Jersey 08401, and Wells Fargo Bank, National Association, as successor by merger to Wells Fargo Bank Minnesota, National Association (herein called the "Trustee"). The Company has duly authorized and issued its 11% Notes Due 2005 (herein called "Notes" or the "Securities"), under an Indenture, dated as of September 29, 2000 (the "Original Indenture") of substantially the tenor and amount set forth in the Original Indenture, and to provide therefor the Company has duly authorized the execution and delivery of the Original Indenture, as amended and restated by the Indenture. The Indenture is hereby modified, amended and supplemented by the following: ARTICLE I DEFINITIONS Section 1.1 Definitions. For all purposes of this Amendment No. 1, except as otherwise expressly provided or unless the context otherwise requires: (i) unless otherwise defined herein, all terms used herein shall have the meaning attributed to them under the Indenture; (ii) the terms defined in this Amendment No. 1 have the meanings assigned to them in this Article, and include the plural as well as the singular; (iii) the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Amendment No. 1 as a whole and not to any particular Article, Section or other subdivision. "ACE" means ACE Gaming LLC, a New Jersey limited liability company. "ACE Holdings" means Atlantic Coast Entertainment Holdings, Inc., a Delaware corporation. "Asset Transfer Transactions" means the transfer (a) by Holdings of all of its assets (other than the stock of GBHC and the Company) to GBHC; (b) by GBHC of substantially all of its assets, including the assets it received from Holdings, to ACE Holdings or ACE; and (c) by ACE Holdings of all such assets (less the cash paid to the holders of the Notes pursuant to the Exchange and Consent) to ACE, all as contemplated in the Prospectuses. "Exchange and Consent" means the exchange of the Notes for notes issued by ACE Holdings, and the solicitation of consents of holders of Notes, and all related activities and payments, all as contemplated in the Prospectuses. "Merger" means (a) the merger of the Company into an entity owned by GBHC; (b) the merger of the surviving entity and GBHC into Holdings; and (c) any other merger transaction implemented to achieve any of the foregoing. "Prospectuses" means those two registration statements and prospectuses, as amended, filed by ACE Holdings on Form S-4 with the Securities and Exchange Commission, with respect to the Transactions. "Section 1409 Release Notice" means a written notice of any or all of Holdings, the Company or GBHC in the form of a Company Order, delivered pursuant to Section 1409. "Transactions" means the Asset Transfer Transactions, the Merger, the Warrant Distribution, the Exchange and Consent and all of the other acts, activities, actions and transactions contemplated in the Prospectuses or otherwise taken in connection therewith. "Transfer" means each transfer, assignment, disposition or conveyance occurring as part of or in connection with the Asset Transfer Transactions. "Transferee" means any Person that obtains or receives any Transfer of assets in the Asset Transfer Transactions, including, without limitation, ACE Holdings and ACE. "Warrant Distribution" means the distribution by Holdings of shares of common stock or warrants to acquire shares of the common stock of ACE Holdings as contemplated in the Prospectuses. ARTICLE II ADDITION OF SECTION 803 TO ARTICLE EIGHTH "CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE" OF THE INDENTURE Article Eight of the Indenture is hereby amended by the addition of the following: Section 803. Asset Transfer Transaction. Notwithstanding any other provision of the Indenture, Holdings and its Subsidiaries may engage without restriction in the Transactions free and clear of: (a) any restrictions or obligations under or created by the Indenture or any Security Documents and (b) any Security Interests or other liens or claims under or created by the Indenture or any Security Documents, and neither Holdings and its Subsidiaries nor any other Person shall be required to act in accordance with the provisions of Section 801 or 802 of the Indenture in connection therewith or to comply with those or any other provisions of the Indenture in connection with the Transactions. No Transferee in or party to any Asset Transfer Transaction, or party to the Merger, shall be: (i) required to assume any of the obligations of any person under the Indenture or 2 to grant, perfect or protect any Security Interests or other lien or claim in connection therewith or otherwise; (ii) or be deemed to be a successor to or to succeed or be substituted for, the Company or any Guarantor in any respect; or (iii) be required to provide any certificate or opinion to any person. Any Transferee of assets in any Asset Transfer Transaction and any recipient of securities in the Warrant Distribution shall obtain those assets and securities free and clear of any obligation, guaranty, lien, claim or encumbrance other than, with respect to any Asset Transfer Transaction, any obligation expressly undertaken in writing in the documents implementing such Asset Transfer Transaction and, for the avoidance of doubt, no such person or other person, other than Holdings, shall have or be deemed to be subject to, any obligations under the Indenture (including any amendment thereto pursuant to Exhibit A hereto). ARTICLE III ADDITION TO SECTION 1013 "LIMITATION ON RESTRICTED PAYMENTS" OF THE INDENTURE Section 1013 of the Indenture is hereby amended by the addition of the following as the final paragraph thereof: The provisions of this Section 1013 notwithstanding, neither the Warrant Distribution nor any of the other Transactions, nor any portion thereof, shall for any purpose be deemed to constitute or involve a "Restricted Payment" or otherwise be restricted by or subject to the terms of this Section 1013, and the provisions of this Section 1013 set forth in the preceding paragraphs shall have no application to the Transactions in any respect. ARTICLE IV ADDITION TO SECTION 1017 "LIMITATION ON ASSET SALES" OF THE INDENTURE Section 1017 of the Indenture is hereby amended by the addition of the following as the final paragraph thereof: The provisions of Section 101 and this Section 1017 notwithstanding, neither the Asset Transfer Transactions, the Merger nor any of the other Transactions, nor any portion thereof, shall for any purpose be deemed to constitute or involve an "Asset Sale" or otherwise be restricted by or subject to the terms of this Section 1017, and the provisions of this Section 1017 set forth in the preceding paragraphs shall have no application to the Transactions or any portion thereof. ARTICLE V ADDITION TO SECTION 1019 "OWNERSHIP OF STOCK OF SUBSIDIARY" OF THE INDENTURE Section 1019 of the Indenture is hereby amended by the addition of the following as the final paragraph thereof: The provisions of this Section 1019 notwithstanding, neither the Asset Transfer Transactions, the Merger nor any of the other Transactions, nor any portion thereof, shall for any 3 purpose be deemed to be restricted by or subject to the terms of this Section 1019, and the provisions of this Section 1019 set forth in the preceding paragraphs shall have no application to the Transactions or any portion thereof. ARTICLE VI ADDITION TO SECTION 1020 "LIMITATION ON TRANSACTIONS WITH AFFILIATES" OF THE INDENTURE Section 1020 of the Indenture is hereby amended by the addition of the following as the final paragraph thereof: The provisions of this Section 1020 notwithstanding, neither the Asset Transfer Transactions, the Warrant Distribution, the Exchange and Consent nor any of the other Transactions, nor any portion thereof, shall for any purpose be deemed to be restricted by or subject to the terms of this Section 1020, and the provisions of this Section 1020 set forth in the preceding paragraphs shall have no application to the Transaction or any portion thereof. ARTICLE VII ADDITION TO SECTION 1409 TO ARTICLE FOURTEENTH, "SECURITY INTEREST" OF THE INDENTURE Article Fourteenth of the Indenture is hereby amended by the addition of the following: Section 1409. Release of Liens, Termination of Security Documents. A Section 1409 Release Notice may be delivered in anticipation of the Asset Transfer Transactions. A Section 1409 Release Notice (the "Release Notice") shall be in the form of a Company Order, and shall request that the Trustee execute one or more specifically described release instruments, documents and agreements (which release instruments, documents and agreements shall accompany such Section 1409 Release Notice). Additionally, the Release Notice shall (a) include a certified copy of the Board Resolution of Holdings or any of its Subsidiaries in which such Board of Directors approved the delivery thereof; (b) be accompanied by an opinion of outside counsel to the Company and the Guarantors (not by counsel which is an employee of the Company), which counsel shall be reasonably satisfactory to the Trustee, stating that the action contemplated by this Section 1409 is authorized and permitted by the Indenture as modified by this Amendment No. 1 and that all conditions precedent herein relating to such action have been complied with; and (c) if required by the TIA, be accompanied by certificates in accordance with Section 314 of the TIA. Upon receipt of the Release Notice, all of the Security Interests and other Liens created by the Security Documents or the Indenture shall, without any further act or deed, be and be deemed to be released and terminated and all of the Security Documents shall be terminated and shall be of no further force or effect and in order to further evidence the foregoing, the Trustee, at Holdings' expense, shall execute and deliver, within one Business Day from the receipt of such Release Notice, any instruments, documents and agreements specified by Holdings or any of its Subsidiaries to release all or any part of the Collateral from the Security Interests or 4 any other Liens created by the Security Documents or the Indenture including, without limitation, all instruments, documents and agreements necessary to release any and all Liens of record and to terminate the Security Documents. The provisions of this Section 1409 are in addition to, and not in limitation of, any other provision of this indenture. ARTICLE VIII WAIVER It is intended that the Transactions be permitted to occur and that the same shall not be deemed to conflict with or constitute any breach of or default under the terms of the Indenture or the Security Documents and that any existing breach or default be waived. Therefore, in furtherance thereof and not in limitation of any terms, provisions or conditions set forth in this Amendment No. 1, any term, provision or condition set forth in the Indenture, the Security Documents or any instrument, document or agreement related thereto that conflicts with, prevents, is inconsistent with, prohibits or otherwise would be violated by, or in connection with, the Transactions or any portion thereof, and any breach or default that has occurred, or may occur, in respect of the Transactions or any portion thereof, and any other breach or default under the Indenture, the Security Documents or any instrument, documents or agreement related thereto occurring on or prior to the execution of this Amendment No. 1, and all consequences of the foregoing, are hereby waived in all respects and any Event of Default arising from or in respect of any of the foregoing shall be deemed to have been cured and released, and compliance with any such terms, provisions and conditions is not required and may be omitted. ARTICLE IX SECOND AMENDED AND RESTATED INDENTURE The Indenture is hereby further amended and restated in its entirety, as set forth in Exhibit A hereto, which shall be effective upon the completion of the Transaction following the delivery of a certificate, to the Trustee, from an officer of Holdings stating that the Transaction has been completed; provided however that, in all events the Transactions and the parties thereto (including without limitation the Transferees) shall continue to be governed by and benefit from and enjoy the benefits and be entitled to the rights provided in, this Amendment No. 1. ARTICLE X MISCELLANEOUS Section 10.1 Counterparts. ------------ This Amendment No. 1 may be signed in any number of counterparts each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same Indenture. Section 10.2 Subsidiaries. ------------ Following the execution and delivery of this Amendment No. 1, the Indenture, including the amendment thereof by Exhibit A hereto (except as provided or contemplated in this 5 Amendment No. 1) shall cease to have any application to any Subsidiary of Holdings, GBHC or the Company (other than to GBHC and the Company as Subsidiaries of Holdings). Section 10.3 Effect on Indenture. ------------------- Following the execution and delivery of this Amendment No. 1, the Indenture shall be deemed to include the terms and provisions of this Amendment No. 1. Section 10.4. Third Party Beneficiaries. ------------------------- Each Transferee shall be deemed to be a third party beneficiary of this Amendment No. 1. Section 10.5 Concerning the Trustee. ---------------------- The Trustee shall not be responsible in any manner whatsoever for or in respect of the sufficiency of this Amendment No. 1 or for or in respect of the recitals contained herein, all of which are made solely by the Company. In entering into this Amendment No. 1, the Trustee shall be entitled to the benefit of every provision of the Indenture relating to the conduct or affecting the liability of, or affording protection to, the Trustee, whether or not elsewhere herein so provided. 6 IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written. GB PROPERTY FUNDING CORP. By /s/ Douglas S. Niethold ---------------------------------------------------- Title: Vice President Finance, Chief Financial Officer and Principal Accounting Officer Attest: /s/ Patricia M. Wild --------------------------------------------- Title: Vice President, General Counsel and Secretary GB HOLDINGS, INC. By /s/ Douglas S. Niethold ---------------------------------------------------- Title: Vice President Finance, Chief Financial Officer and Principal Accounting Officer Attest: /s/ Patricia M. Wild --------------------------------------------- Title: Vice President, General Counsel and Secretary GREATE BAY HOTEL AND CASINO, INC. By /s/ Douglas S. Niethold ---------------------------------------------------- Title: Vice President Finance, Chief Financial Officer and Principal Accounting Officer Attest: /s/ Patricia M. Wild --------------------------------------------- Title: Vice President, General Counsel and Secretary WELLS FARGO BANK, NATIONAL ASSOCIATION By /s/ Jane Schweiger ---------------------------------------------------- Title: Vice President
7 EXHIBIT A ================================================================================ GB HOLDINGS INC. and WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee -------------- Second Amended and Restated Indenture Dated as of July 22, 2004 -------------- $43,741,030 Million 11% Notes Due 2005 ================================================================================ A-i GB HOLDINGS, INC. RECONCILIATION AND TIE BETWEEN TRUST INDENTURE ACT OF 1939 AND INDENTURE, DATED AS OF JULY 22, 2004
TIA INDENTURE SECTION SECTION - ------- --------- 310 (a) (1).................................................................................607 (a) (2).................................................................................607 (a) (3).................................................................................N.A. (a) (4).................................................................................N.A. (a) (5).................................................................................607 (b) ....................................................................................604, 608 (c) ....................................................................................N.A. 311 .........................................................................................604 312 .........................................................................................701 313 .........................................................................................601, 702 314 (a) ....................................................................................703, 1008 (b) ....................................................................................N.A. (c) (1).................................................................................102 (c) (2).................................................................................102 (c) (3).................................................................................N.A. (d) ....................................................................................N.A. (e) ....................................................................................102 (f) ....................................................................................N.A. 315 (a) ....................................................................................602 (b) ....................................................................................601 (c) ....................................................................................602 (d) ....................................................................................602 (e) ....................................................................................N.A. 316 (a) (last sentence).....................................................................101("Outstanding") (a) (1) (A).............................................................................512 (a) (1) (B).............................................................................513 (a) (2).................................................................................N.A. (b) ....................................................................................508 (c) ....................................................................................104(d) A-ii 317 (a) (1).................................................................................503 (a) (2).................................................................................504 (b) ....................................................................................1003 318 (a) ....................................................................................111
- -------------- Note: This reconciliation and tie shall not, for any purpose, be deemed to be a part of the Indenture. A-iii TABLE OF CONTENTS (1) PARTIES........................................................................................................1 RECITALS.......................................................................................................1 ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION Section 101. Definitions.....................................................................................1 Section 102. Compliance Certificates and Opinions............................................................10 Section 103. Form of Documents Delivered to Trustee..........................................................11 Section 104. Acts of Holders.................................................................................11 Section 105. Notices, etc., to Trustee, Company and Guarantors...............................................13 Section 106. Notice to Holders; Waiver.......................................................................13 Section 107. Effect of Headings and Table of Contents........................................................14 Section 108. Successors and Assigns..........................................................................14 Section 109. Separability Clause.............................................................................14 Section 110. Benefits of Indenture...........................................................................14 Section 111. Governing Law...................................................................................14 Section 112. Legal Holidays..................................................................................14 Section 113. Casino Control Act..............................................................................14 ARTICLE TWO SECURITY FORMS Section 201. Forms Generally.................................................................................15 Section 202. Form of Face of Notes...........................................................................15 Section 203. Form of Reverse of Notes........................................................................17 Section 204. Form of Trustee's Certificate of Authentication.................................................19 ARTICLE THREE THE SECURITIES Section 301. Title and Terms.................................................................................19 Section 302. Denominations...................................................................................20 Section 303. Execution, Authentication, Delivery and Dating..................................................20 Section 304. Temporary Securities............................................................................21
- -------------- (1) This table of contents shall not, for any purpose, be deemed to be a part of this Indenture. A-iv Section 305. Registration, Registration of Transfer and Exchange.............................................22 Section 306. Mutilated, Destroyed, Lost and Stolen Securities................................................23 Section 307. Payment of Interest; Interest Rights Preserved..................................................23 Section 308. Persons Deemed Owners...........................................................................24 Section 309. Cancellation....................................................................................24 Section 310. Computation of Interest.........................................................................25 Section 311. Maximum Interest Rate...........................................................................25 ARTICLE FOUR SATISFACTION AND DISCHARGE Section 401. Satisfaction and Discharge of Indenture..........................................................25 Section 402. Application of Trust Money.......................................................................26 ARTICLE FIVE REMEDIES Section 501. Events of Default................................................................................27 Section 502. Acceleration of Maturity; Rescission and Annulment...............................................28 Section 503. Collection of Indebtedness and Suits for Enforcement by Trustee..................................29 Section 504. Trustee May File Proofs of Claim.................................................................29 Section 505. Trustee May Enforce Claims Without Possession of Securities......................................30 Section 506. Application of Money Collected...................................................................30 Section 507. Limitation on Suits..............................................................................30 Section 508. Unconditional Right of Holders to Receive Principal, Premium and Interest........................31 Section 509. Restoration of Rights and Remedies...............................................................31 Section 510. Rights and Remedies Cumulative...................................................................31 Section 511. Delay or Omission Not Waiver.....................................................................32 Section 512. Control by Holders...............................................................................32 Section 513. Waiver of Defaults and Compliance................................................................32 ARTICLE SIX THE TRUSTEE Section 601. Notice of Defaults...............................................................................33 Section 602. Certain Rights of Trustee........................................................................33 Section 603. Trustee Not Responsible for Recitals or Issuance of Securities...................................34 Section 604. May Hold Securities..............................................................................34 Section 605. Money Held in Trust..............................................................................35 A-v Section 606. Compensation and Reimbursement...................................................................35 Section 607. Corporate Trustee Required: Eligibility..........................................................35 Section 608. Resignation and Removal; Appointment of Successor................................................36 Section 609. Acceptance of Appointment by Successor...........................................................37 Section 610. Merger, Conversion, Consolidation or Succession to Business......................................37 ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE, COMPANY AND GUARANTORS Section 701. Disclosure of Names and Addresses of Holders.....................................................38 Section 702. Reports by Trustee...............................................................................38 Section 703. Reports by Company...............................................................................38 ARTICLE EIGHT CONSOLIDATION AND MERGER Section 801. Company May Merge and Consolidate................................................................40 Section 802. Successor Substituted............................................................................40 ARTICLE NINE SUPPLEMENTAL INDENTURES Section 901. Supplemental Indentures and Amendments Without Consent of Holders................................41 Section 902. Supplemental Indentures and Amendments with Consent of Holders...................................41 Section 903. Execution of Supplemental Indentures and Amendments..............................................42 Section 904. Effect of Supplemental Indentures................................................................42 Section 905. Conformity with Trust Indenture Act..............................................................42 Section 906. Reference in Securities to Supplemental Indentures...............................................42 Section 907. Notice of Supplemental Indentures and Amendments.................................................43 ARTICLE TEN COVENANTS Section 1001. Payment of Principal, Premium, if any, and Interest.............................................43 Section 1002. Maintenance of Office or Agency.................................................................43 Section 1003. Money for Security Payments to Be Held in Trust.................................................44 Section 1004. Corporate Existence.............................................................................45 Section 1005. Payment of Taxes and Other Claims...............................................................45 Section 1006. Maintenance of Properties.......................................................................45 A-vi Section 1007. [Intentionally Omitted].........................................................................45 Section 1008. Statement by Officers as to Compliance..........................................................45 Section 1009. Statement by Officers of Certain Defaults.......................................................45 Section 1010. [Intentionally Omitted].........................................................................46 Section 1011. [Intentionally Omitted].........................................................................46 Section 1012. [Intentionally Omitted].........................................................................46 Section 1013. Limitation on Restricted Payments...............................................................46 Section 1014. [Intentionally Omitted].........................................................................46 Section 1015. [Intentionally Omitted].........................................................................46 Section 1016. [Intentionally Omitted].........................................................................46 Section 1017. Limitation on Asset Sales.......................................................................46 Section 1018. [Intentionally Omitted].........................................................................47 Section 1019. [Intentionally Omitted].........................................................................47 Section 1020. [Intentionally Omitted].........................................................................47 Section 1021. [Intentionally Omitted].........................................................................47 Section 1022. [Intentionally Omitted].........................................................................47 Section 1023. [Intentionally Omitted].........................................................................47 Section 1024. [Intentionally Omitted].........................................................................47 Section 1025. [Intentionally Omitted].........................................................................47 Section 1026. [Intentionally Omitted].........................................................................47 Section 1027. [Intentionally Omitted].........................................................................47 ARTICLE ELEVEN REDEMPTION OF SECURITIES Section 1101. Optional Redemption.............................................................................47 Section 1102. Applicability of Article........................................................................47 Section 1103. Election to Redeem; Notice to Trustee...........................................................47 Section 1104. Selection by Trustee of Securities to Be Redeemed...............................................47 Section 1105. Notice of Redemption............................................................................38 Section 1106. Deposit of Redemption Price.....................................................................49 Section 1107. Securities Payable on Redemption Date...........................................................49 Section 1108. Securities Redeemed in Part.....................................................................49 Section 1109. Redemption Pursuant to Gaming Laws..............................................................49 A-vii ARTICLE TWELVE [INTENTIONALLY OMITTED] ARTICLE THIRTEEN DEFEASANCE AND COVENANT DEFEASANCE Section 1301. Company's Option to Effect Defeasance or Covenant Defeasance....................................50 Section 1302. Defeasance and Discharge........................................................................50 Section 1303. Covenant Defeasance.............................................................................51 Section 1304. Conditions to Defeasance or Covenant Defeasance.................................................51 Section 1305. Deposited Money and U.S. Government Obligations To Be Held in Trust; Other Miscellaneous Provisions...................................................................................53 Section 1306. Reinstatement...................................................................................53 ARTICLE FOURTEEN INTENTIONALLY OMITTED ARTICLE FIFTEEN MISCELLANEOUS Section 1501. Counterparts.....................................................................................54 EXHIBIT A TESTIMONIUM...................................................................................................... SIGNATURE AND SEALS..............................................................................................
A-viii SECOND AMENDED AND RESTATED INDENTURE, dated as of July 22, 2004 among GB Holdings, Inc. (herein called the "Company"), successor by merger (the "Merger") to GB Property Funding Corp. (herein called "Funding"), and Greate Bay Hotel and Casino, Inc. (herein called "GBHC," and, together with Funding, herein called the "Merged Companies"), which is a corporation duly organized and existing, under the laws of the State of Delaware, and having its principal office c/o Sands Hotel and Casino at Indiana Avenue & Brighton Park, Atlantic City, New Jersey 08401, and Wells Fargo Bank, National Association, as successor by merger to Wells Fargo Bank Minnesota, National Association (herein called the "Trustee"). The Company, the Merged Companies and the Trustee were parties to an Amended and Restated Indenture, dated as of October 12, 2001 (the "First Amended and Restated Indenture") which was further amended by Amendment No. 1 thereto ("Amendment No. 1"). Funding authorized and issued its 11% Notes Due 2005 (herein called "Notes" or the "Securities"), under an indenture, dated as of September 29, 2000 (the "Original Indenture") of substantially the tenor and amount set forth in the Original Indenture in the original principal amount of $110 million. As a result of an exchange transaction completed on or about the date of this indenture, the remaining outstanding principal amount of the Notes is $43,741,030. To provide therefor, the Company has duly authorized the execution and delivery of the Original Indenture, as amended and restated by the Amended and Restated Indenture, as further amended by Amendment No. 1 to the First Amended and Restated Indenture and this Second Amended and Restated Indenture (this "Indenture"). Each of GBHC and the Company were guarantors of the Securities. By virtue of the Merger of GBHC and Funding into the Company, the Company has succeeded to all of the obligations of GBHC and Funding in respect of the Securities and has become the obligor thereof. Any reference herein or in any of the Securities to the Company, GBHC, Holdings "Guarantors" or any guarantor or issuer of the Notes shall, for all purposes, be deemed to refer only to the Company. This Indenture is subject to the provisions of the Trust Indenture Act of 1939, as amended, that are required to be part of this Indenture and shall, to the extent applicable, be governed by such provisions. For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities, as follows: ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION SECTION 101. Definitions. ----------- For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires: A-1 (i) the terms defined in this Article have the meanings assigned to them in this Article, and include the plural as well as the singular; (ii) all other terms used herein which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein, and the terms "cash transaction" and "self-liquidating paper," as used in TIA Section 311, shall have the meanings assigned to them in the rules of the Commission adopted under the Trust Indenture Act; (iii) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles, and, except as otherwise herein expressly provided, the term "generally accepted accounting principles" with respect to any computation required or permitted hereunder shall mean such accounting principles as are generally accepted at the date of such computation; (iv) [intentionally omitted]; and (v) the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. "Act," when used with respect to any Holder, has the meaning specified in Section 104. "Affiliate" of any Person means any other Person that, directly or indirectly, controls, is controlled by or is under direct or indirect common control with, such Person and with respect to any natural Person, any other Person having a relationship by blood, marriage or adoption, not more remote than first cousins with such natural Person. For the purposes of this definition, "control" when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of Voting Stock or other equity interests, by contract or otherwise, and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Asset Sale" means, as applied to any Person, any direct or indirect sale, conveyance, transfer, lease or other disposition (other than a Sale-Leaseback Transaction) by such Person or any Subsidiary of such Person to any Person other than such Person or a wholly-owned Subsidiary of such Person, in one transaction or a series of related transactions, of any Capital Stock of any Subsidiary of such Person or other similar equity interest of such Subsidiary or any other property or asset of such Person or any Subsidiary of such Person; provided that the term "Asset Sale" shall not include (a) sales, conveyances, transfers, leases or other dispositions in the ordinary course of business; (b) all other dispositions pursuant to which such Person receives, directly or indirectly, Net Cash Proceeds or fair market value of less than or equal to $5,000,000 in the aggregate in any twelve month period; (c) sales, conveyances, transfers, leases or other dispositions of CRDA Investments; and (d) sales, conveyances, transfers, leases or other dispositions by either Atlantic Coast Entertainment Holdings, Inc., ACE Gaming, LLC, or any of its or their subsidiaries. A-2 "Assets" means, as applied to any Person, any tangible or intangible assets, or rights or real or personal properties of such Person or any of its Subsidiaries including capital stock of Subsidiaries. "Board of Directors" means either the board of directors of a Person or any duly authorized committee of that board. "Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of a Person to have been duly adopted by the Board of Directors of such Person and to be in full force and effect on the date of such certification, and delivered to the Trustee. "Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in The City of New York or the State of New Jersey are authorized or obligated by law or executive order to close. "Capital Stock" means, with respect to any Person, any and all shares, interests, participations, rights in, or other equivalents (however designated and whether voting or non-voting) of, such Person's capital stock, whether outstanding on the Issue Date or issued after such date, and any and all rights, warrants or options exchangeable for or convertible into such capital stock. "Capitalized Lease Obligation" means any obligation to pay rent or other amounts under a lease of (or other agreement conveying the right to use) any property (whether real, personal or mixed) that is required to be classified and accounted for as a capital lease obligation under GAAP, and, for the purpose hereof, the amount of such obligation at any date of determination shall be the capitalized amount thereof at such date, determined in accordance with GAAP. "Cash Equivalents" means any of the following, to the extent owned by Holdings or any of its Subsidiaries free and clear of all Liens (other than Liens in favor of the Trustee or the Holders) and having a maturity of not greater than 270 days from the date of acquisition: (a) any evidence of Indebtedness issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (provided that the full faith and credit of the United States of America is pledged in support thereof): (b) insured certificates of deposit or acceptances of any commercial bank that is a member of the Federal Reserve System, that issues (or the parent of which issues) commercial paper rated as described in clause (c) below and that has combined capital and surplus and undivided profits of not less than $100,000,000; (c) commercial paper issued by a corporation (except an Affiliate of Holdings) organized under the laws of any state of the United States or the District of Columbia and rated at least A-1 (or the then equivalent grade) by Standard & Poor's Corporation or at least Prime-1 (or the then equivalent grade) by Moody's Investors Service, Inc.; and (d) repurchase agreements and reverse repurchase agreements relating to marketable direct obligations issued or unconditionally guaranteed by the United States government or issued by any agency thereof (provided that the full faith and credit of the United States of America is pledged in support thereof); provided that the terms of such agreements comply with the guidelines set forth in the Federal Financial Agreements of Depository Institutions with Securities Dealers and Others, as adopted by the Comptroller of the Currency. A-3 "Casino Control Act" means the New Jersey Casino Control Act, N.J. Stat. Ann. 5:12-1 et seq. (New Jersey Public Law 1977, C.110), and the regulations promulgated thereunder, N.J.A.C. 19:40-1.1 et seq., as from time to time amended, or any successor provision of law. "Casino Control Commission" means the New Jersey Casino Control Commission as established by Section 50 of the Casino Control Act or any successor agency appointed pursuant to the Casino Control Act. "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Securities Exchange Act of 1934, or, if at any time after the execution of this Indenture such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time. "Common Stock" means, with respect to any Person, any and all shares, interests, participations and other equivalents (however designated, whether voting or non-voting) of such Person's common stock, whether now outstanding or issued after the Issue Date, and includes, without limitation, all series and classes of such common stock. "Company" means GB Holdings, Inc., until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean such successor Person. "Company Request" or "Company Order" means a written request or order signed in the name of the Company by its Chairman, its President, any Vice President, its Treasurer or an Assistant Treasurer, and delivered to the Trustee. "Corporate Trust Office" means the principal corporate trust office of the Trustee, at which at any particular time its corporate trust business shall be administered, which office at the date of execution of this Indenture is located at 6th and Marquette, MAC N9303-120, Minneapolis, MN 55479, except that with respect to presentation of Securities for payment or for registration of transfer or exchange, such term shall mean the office or agency of the Trustee at which, at any particular time, its corporate agency business shall be conducted. "Corporation" includes corporations, associations, companies and business trusts. "CRDA Investments" means Investments in securities issued by, and monies deposited with, the Casino Reinvestment Development Authority of the State of New Jersey. "Default" means any Event of Default, or an event that would constitute an Event of Default but for the requirement that notice be given or time elapse or both. "Defaulted Interest" has the meaning specified in Section 307. "Disqualified Holders" shall have the meaning provided in Section 1109. "Disqualified Stock" means, with respect to any Person, any Capital Stock or other similar ownership or profit interest that, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is exchangeable for Indebtedness, or is redeemable at the option of the holder thereof, in whole or in part, on or before the Maturity Date of the Securities. A-4 "Division of Gaming Enforcement" means the Division of Gaming Enforcement of the New Jersey Department of Law and Public Safety as established by Section 55 of the Casino Control Act or any successor division or agency. "Event of Default" has the meaning specified in Section 501. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Exchanged Amount" means the principal amount of Securities exchanged in the Exchange Offer. "Exchange Offer" means that certain offer for the exchange of Notes set forth in a prospectus of Atlantic Coast Entertainment Holdings, Inc., dated June 1, 2004. "Fair Market Value" or "fair value" means either, (a) with respect to any asset or property, the price which could be negotiated in an arm's-length free market transaction, for cash, between a willing seller and a willing buyer, neither of whom is under undue pressure or compulsion to complete the transaction (the "Arm's Length Value") as determined by the Board of Directors of the Company acting in good faith and evidenced by a Board Resolution delivered to the Trustee or (b) with respect to any asset or property, any value within a range of values determined to reflect the Arm's Length Value by an investment banking firm retained by the Company or the Board. "Federal Bankruptcy Code" means the 1978 Bankruptcy Act of Title 11 of the United States Code, as amended from time to time. "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board that are applicable as of the Issue Date. "Gaming Authority" means any agency, authority, board, bureau, commission, department, office or instrumentality of any nature whatsoever of the United States federal government or foreign government, any state, province or any city or other political subdivision or otherwise and whether now or hereafter in existence, or any officer or official thereof with authority to regulate any gaming operation (or proposed gaming operation) owned, managed, or operated by Holdings or any of its Subsidiaries. "Gaming Laws" means each gaming law of any applicable Gaming Authority as amended from time to time, and the regulations promulgated and rulings issued thereunder applicable to Holdings or any of its Subsidiaries or shareholders. "Holder" means a Person in whose name a Security is registered in the Security Register. "incur" means to directly or indirectly create, assume, suffer to exist, guarantee in any manner, or in any manner become liable for the payment of. "Indebtedness" of any Person means (a) any liability, contingent or otherwise, of such Person (whether or not the recourse of the lender is to the whole of the assets of such Person, or only to a portion thereof), (i) for borrowed money evidenced by a note, bond, debenture or A-5 similar instrument, letters of credit, acceptances or other similar facilities (other than a trade payable or a current liability incurred in the ordinary course of business) or (ii) for the payment of money relating to a Capitalized Lease Obligation or other obligation relating to the deferred purchase price of property or services (including a purchase money obligation); (b) any liability of others of the kind described in the preceding clause (a) which such Person has guaranteed including, without limitation, (i) to pay or purchase such liability; (ii) to supply funds to or in any other manner invest in the debtor (including an agreement to pay for property or services irrespective of whether such property is received or such services are rendered; and (iii) to purchase, sell or lease (as lessee or lessor) property or to purchase or sell services, primarily for the purpose of enabling a debtor to make a payment of such Indebtedness or to assure the holder of such Indebtedness against loss; (c) any obligation secured by a Lien to which the property or assets of such Person are subject, whether or not the obligations secured thereby shall have been assumed by or shall otherwise be such Person's legal liability; (d) all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any Capital Stock of or other ownership or profit interest in such Person or any of its Affiliates or any warrants, rights or options to acquire such Capital Stock, valued, in the case of Disqualified Stock, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends; (e) all Interest and Currency Rate Protection Obligations; and (f) any and all deferrals, renewals, extensions and refundings of any liability of the kind described in any of the preceding clauses. "Indenture" means this instrument as originally executed and as it may from time to time be supplemented, changed, modified or amended (by any addition to or elimination of, the provisions hereof, or otherwise) by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof. "Independent," when used with respect to any Person, means such other Person who (a) does not have any material financial interest in the Company or in any Affiliate of the Company and (b) is not an officer, employee, promoter, underwriter, trustee, partner or person performing similar functions for the Company or a spouse, family member or other relative of any such Person; provided, that with respect to any director of any corporation, such director shall also be deemed to be "Independent" if such director meets the requirements for independence established by any "national securities exchange" (as contemplated in the Securities Exchange Act of 1934) for audit committee membership. Whenever it is provided in this Indenture that any Independent Person's opinion or certificate shall be furnished to the Trustee, such Person shall be appointed by the Company. "Interest and Currency Rate Protection Obligations" means the obligations of any Person pursuant to any interest rate swap, cap or collar agreement, interest rate future or option contract, currency swap agreement, currency future or option contract and other similar agreement designed to hedge against fluctuations in interest rates or foreign exchange rates. "Interest Payment Date" means the Stated Maturity of an installment of interest on the Securities. "Investment" in any Person means any direct or indirect loan, advance, guarantee or other extension of credit or capital contribution to (including, without limitation, transfers of cash or other property to others or payments for property or services for the account or use of A-6 others (excluding unbilled or uncollected receivables), or otherwise), or purchase or acquisition of Capital Stock, warrants, rights, options, bonds, notes, debentures or other securities or evidences of Indebtedness issued by, any other Person or Indebtedness of any other Person secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien (including, without limitation, accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness. "Issue Date" means September 29, 2000. "Lien" means any mortgage, lien (statutory or other), pledge, security interest, encumbrance, hypothecation, assignment for security, or other security agreement of any kind or nature whatsoever. For purposes of this Indenture, a Person shall be deemed to own subject to a Lien any property which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, or other title retention agreement relating to such Person. "Maturity," when used with respect to any Security, means the date on which the principal of such Security or an installment of principal becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, notice of redemption or otherwise. "Maturity Date," when used with respect to any Security, means the date specified in such Security as the fixed date on which the final installment of principal of such Security is due and payable. "Net Cash Proceeds" means, with respect to any Asset Sale the proceeds thereof in the form of cash or Cash Equivalents received by the Company (whether as initial consideration, through the payment or disposition of deferred compensation or the release of reserves), after deducting therefrom (without duplication): (a) reasonable and customary brokerage commissions, underwriting fees and discounts, legal fees, finders fees and other similar fees and expenses incurred in connection with such Asset Sale; (b) provisions for all taxes payable as a result of such Asset Sale; (c) payments made to retire Indebtedness (other than payments on the Securities) secured by the assets subject to such Asset Sale to the extent required pursuant to the terms of such Indebtedness; and (d) appropriate amounts to be provided by the Company as a reserve, in accordance with GAAP, against any liabilities associated with such Asset Sale and retained by the Company after such Asset Sale, including, without limitation, pension and other post-employment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations associated with such Asset Sale, in each case to the extent, but only to the extent, that the amounts so deducted are, at or around the time of receipt of such cash or Cash Equivalents, actually paid to a Person that is not an Affiliate of the Company or, in the case of reserves, are actually established and, in each case, are properly attributable to such Asset Sale . "Officers' Certificate" for any Person means a certificate signed by the Chairman, the President, Executive Vice President or a Vice President, and by the Chief Financial Officer or the Secretary of such Person, and delivered to the Trustee. A-7 "Opinion of Counsel" means a written opinion of counsel for the Company or any of the Guarantors or any of their respective Affiliates, including an employee of any such Person, or any other counsel reasonably acceptable to the Trustee. "Outstanding," when used with respect to Securities, means, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except: (i) Securities theretofore cancelled by the Trustee or delivered to the Trustee for cancellation; (ii) Securities, or portions thereof, for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Securities; provided that, if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made; (iii) Securities, except to the extent provided in Sections 1302 and 1303, with respect to which the Company has effected defeasance and/or covenant defeasance as provided in Article Thirteen; and (iv) Securities in respect of which, pursuant to Section 306, other Securities have been authenticated and delivered pursuant to this Indenture, other than any such Securities in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Securities are held by a bona fide purchaser in whose hands the Securities are valid obligations of the Company; provided, however, that in determining whether the Holders of the requisite principal amount of Outstanding Securities have given any request, demand, authorization, direction, consent, notice or waiver hereunder or taken any other action, Securities owned by Holdings or its Subsidiaries shall be disregarded and deemed not to be Outstanding (but the Securities of any other Affiliates shall be deemed for all such purposes to be Outstanding). In determining whether the Trustee shall be protected in making such calculation or in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities owned by Holdings or its Subsidiaries which the Trustee knows to be so owned shall be so disregarded. Securities owned by Holdings or its Subsidiaries which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Securities and that the pledgee is not the Company, a Guarantor or a Subsidiary of Holdings. "Paying Agent" means any Person (including the Company acting as Paying Agent) authorized by the Company to pay the principal of (and premium, if any, on) or interest on any Securities on behalf of the Company. "Permitted Investment" means the direct or indirect acquisition, repair or restoration of property or other Assets (including, without limitation, Securities of any person possessing any such Asset or with rights to, any Assets). A-8 "Person" means an individual, partnership, corporation (including a business trust), joint stock company, trust, unincorporated association, joint venture or other entity, or a government or any political subdivision or agency thereof. "Predecessor Security" of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security; and, for the purposes of this definition, any Security authenticated and delivered under Section 306 in exchange for a mutilated security or in lieu of a lost, destroyed or stolen Security shall be deemed to evidence the same debt as the mutilated, lost, destroyed or stolen Security. "Redemption Date," when used with respect to any Security to be redeemed, in whole or in part, means the date fixed for such redemption by or pursuant to this Indenture. "Redemption Price," when used with respect to any Security to be redeemed, means 100% of the principal amount of such Security, together with accrued, unpaid interest. "Regular Record Date" for the interest payable on any Interest Payment Date means the September 14 or March 14 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. "Responsible Officer," when used with respect to the Trustee, means the chairman or any vice-chairman of the board of directors, the chairman or any vice-chairman of the executive committee of the board of directors, the chairman of the trust committee, the president, any vice president, the secretary, any assistant secretary, the treasurer, any assistant treasurer, the cashier, any assistant cashier, any trust officer or assistant trust officer, the controller or any assistant controller or any other officer of the Trustee customarily performing functions similar to those performed by any of the above-designated officers, and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Restricted Payment" means either of the following: (a) the declaration or payment of any dividend or any other distribution on Common Stock of the Company or any payment made to the direct or indirect holders (in their capacities as such) of Common Stock of the Company in respect of that stock (other than dividends or distributions payable solely in Capital Stock (other than Disqualified Stock) or (b) the purchase, defeasance, redemption or other acquisition or retirement for value of any Common Stock of the Company. "Sale-Leaseback Transaction" means any arrangement with any Person providing for the leasing by Holdings or any Subsidiary of any real or tangible personal property, which property has been or is to be sold or transferred by the Company to such Person or its Affiliates in contemplation of such leasing. "Securities" has the meaning stated in the first recital of this Indenture and more particularly means any Securities authenticated and delivered under this Indenture. "Security Register" and "Security Registrar" have the respective meanings specified in Section 305. "Special Record Date" for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 307. A-9 "Stated Maturity," when used with respect to any Security or any installment of principal thereof or interest thereon, means the date specified in such Security as the fixed date on which the principal of such Security or such installment of principal or interest is due and payable, including pursuant to any mandatory redemption provision (but excluding any provision providing for the repurchase of such security at the option of the holder thereof). "Subsidiary" of any Person means any corporation, partnership, joint venture, trust or estate of which (or in which) more than 50% of (a) the issued and outstanding Capital Stock having ordinary voting power to elect a majority of the Board of Directors of such corporation (irrespective of whether at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency); (b) the interest in the capital or profits of such partnership or joint venture; or (c) the beneficial interest in such trust or estate, is at the time directly or indirectly owned or controlled by such Person, by such Person and one or more of its other Subsidiaries or by one or more of such Person's other Subsidiaries. "Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939, as amended from time to time. "Trustee" means the Person named as the "Trustee" in the first paragraph of this Indenture until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean such successor Trustee. "United States Government Obligations" means securities which are (a) direct obligations of the United States of America for the payment of which its full faith and credit is pledged or (b) obligations of a Person, the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America. "Vice President," when used with respect to the Company or the Trustee, means any vice president, whether or not designated by a number or a word or words added before or after the title "vice president." "Voting Stock" of any Person means Capital Stock of such Person which ordinarily has voting power for the election of directors (or persons performing similar functions) of such Person, whether at all times or only as long as no senior class of securities has such voting power by reason of any contingency. SECTION 102. Compliance Certificates and Opinions. ------------------------------------ Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall furnish to the Trustee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Indenture (including any covenant compliance with which constitutes a condition precedent) relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or request, no additional certificate or opinion need be furnished. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than pursuant to Section 1008) shall include: A-10 (i) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto; (ii) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (iii) a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (iv) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. SECTION 103. Form of Documents Delivered to Trustee. -------------------------------------- In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. SECTION 104. Acts of Holders. --------------- (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture or otherwise to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by agents duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient A-11 for any purpose of this Indenture and conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section. (b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustee deems sufficient. (c) The principal amount and serial numbers of Securities held by any Person, and the date of holding the same, shall be proved by the Security Register. (d) If the Company shall solicit from the Holders of Securities any request, demand, authorization, direction, notice, consent, waiver or other Act, the Company may, at its option, by or pursuant to Board Resolution, fix in advance a record date for the determination of Holders entitled to give such request, demand, authorization, direction, notice, consent, waiver or other Act, but the Company shall have no obligation to do so. Notwithstanding TIA Section 316(c), such record date shall be the record date specified in or pursuant to such Board Resolution, which shall be a date not earlier than the date 30 days prior to the first solicitation of Holders generally in connection therewith and not later than the date such solicitation is completed. If such a record date is fixed, such request, demand, authorization, direction, notice, consent, waiver or other Act may be given before or after such record date, but only the Holders of record at the close of business on such record date shall be deemed to be Holders for the purposes of determining whether Holders of the requisite proportion of Outstanding Securities have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, waiver or other Act, and for that purpose the Outstanding Securities shall be computed as of such record date; provided that no such authorization, agreement or consent by the Holders on such record date shall be deemed effective unless it shall become effective pursuant to the provisions of this Indenture not later than eleven months after the record date. (e) Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefore or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Security. (f) For the purpose of the Company complying with any requirement of the Casino Control Commission, or the Division of Gaming Enforcement or of the Casino Control Act, every holder, intermediary holder, intermediary beneficial holder and beneficial holder of a Security shall be deemed to authorize any Holder and any other holder, intermediary holder, intermediary beneficial holder and beneficial holder of a Security, upon written request of an Officer of the Company, or the Trustee expressing reliance on this Section and enclosing a copy of this Section, to release, and any such holder, intermediary holder, intermediary beneficial holder and beneficial holder shall be required to release, to the Company, or the Trustee, as the A-12 case may be, the name, address, telephone number, principal contact person, and amount of such holdings, intermediary holdings, intermediary beneficial holdings and beneficial holdings of Securities of each such holder, intermediary holder, intermediary beneficial holder and beneficial holder of a Security. SECTION 105. Notices, etc., to Trustee, Company and Guarantors. ------------------------------------------------- Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with, (i) the Trustee by any Holder or the Company shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with the Trustee at its Corporate Trust Office, Attention: Corporate Trust Administration, or (ii) the Company by the Trustee or by any Holder shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to the Company addressed to it at the address of its principal office specified in the first paragraph of this Indenture, with a copy to: Sands Hotel and Casino, Indiana Avenue and Brighton Park, Atlantic City, N.J. 08401, or at any other address previously furnished in writing to the Trustee by the Company. SECTION 106. Notice to Holders; Waiver. ------------------------- Where this Indenture provides for notice of any event to Holders, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder affected by such event, at his address as it appears in the Security Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Any notice mailed to a Holder in the manner herein prescribed shall be conclusively deemed to have been received by such Holder, whether or not such Holder actually receives such notice. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case by reason of the suspension of or irregularities in regular mail service or by reason of any other cause, it shall be impracticable to mail notice of any event to Holders when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Trustee shall be deemed to be a sufficient giving of such notice for every purpose hereunder. Any notices hereunder that are required to be given to the Casino Control Commission shall be addressed to: Document Control Unit, Casino Control Commission, Tennessee Avenue and the Boardwalk, Arcade Building, Atlantic City, New Jersey 08401, Attention: Chief of Administrative Operations. Any notices hereunder that are required to be A-13 given to the Division of Gaming Enforcement shall be addressed to: Division of Gaming Enforcement, 140 East Front Street, CN-047, Trenton, New Jersey 08625, Attention: Deputy Director for the Division of Gaming Enforcement. SECTION 107. Effect of Headings and Table of Contents. ---------------------------------------- The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. SECTION 108. Successors and Assigns. ---------------------- All covenants and agreements in this Indenture shall bind its successors and assigns, whether so expressed or not. SECTION 109. Separability Clause. ------------------- In case any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 110. Benefits of Indenture. --------------------- Nothing in this Indenture or in the Securities, express or implied, shall give to any Person, other than the parties hereto, any Paying Agent, any Securities Registrar and their successors hereunder, and the Holders, any benefit or any legal or equitable right, remedy or claim under this Indenture. SECTION 111. Governing Law. ------------- This Indenture and the Securities shall be governed by and construed in accordance with the law of the State of New York. This Indenture is subject to the provisions of the Trust Indenture Act of 1939, as amended, that are required to be part of this Indenture and shall, to the extent applicable, be governed by such provisions. SECTION 112. Legal Holidays. -------------- In any case where any Interest Payment Date, Redemption Date, sinking fund payment date or Stated Maturity or Maturity of any Security shall not be a Business Day, then (notwithstanding any other provision of this Indenture or of the Securities) payment of interest or principal (and premium, if any) need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the Interest Payment Date, Redemption Date or sinking fund payment date, or at the Stated Maturity or Maturity; provided that no interest shall accrue on such payment for the period from and after such Interest Payment Date, Redemption Date, sinking fund payment date, Stated Maturity or Maturity, as the case may be. SECTION 113. Casino Control Act. ------------------ Notwithstanding the provisions of Section 111 hereof, each of the provisions of this Indenture is subject to and shall be enforced in compliance with the provisions of the Casino Control Act, to the extent applicable, and the regulations promulgated thereunder, unless such provisions are in conflict with the TIA, in which case the TIA shall control. The Securities are to A-14 be held subject to the condition that if a holder thereof is found to be disqualified by the Casino Control Commission pursuant to the provisions of the Casino Control Act, such holder shall dispose of the Securities in accordance with the provisions of Section 1109 hereof. The Company shall have the right to repurchase the Securities at the lowest of (a) the principal amount thereof; (b) the amount which the Disqualified Holder or beneficial owner paid for the Securities, together with accrued interest up to the date of the determination of disqualification; or (c) the market value of such Securities. ARTICLE TWO SECURITY FORMS SECTION 201. Forms Generally. --------------- The Securities and the Trustee's certificate of authentication shall be in substantially the forms set forth in this Article, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or as may, consistently herewith, be determined by the officers executing such Securities, as evidenced by their execution of the Securities. Any portion of the text of any Security may be set forth on the reverse thereof, with an appropriate reference thereto on the face of the Security. The definitive Securities shall be printed, lithographed or engraved on steel-engraved borders or may be produced in any other manner, all as determined by the officers of the Company executing such Securities, as evidenced by their execution of such Securities. SECTION 202. Form of Face of Notes. From and after the effective date of the merger, certificates to be issued to evidence the Security shall be as follows: GB HOLDINGS INC. From and after the effective date of the Merger, certificates to be issued to evidence the Security shall be as follows: 11% NOTE DUE 2005 No. _________________ $ __________________ GB Holdings Inc., a Delaware corporation (herein called the "Holdings," which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to _________ or registered assigns, the principal sum of __________ U.S. Dollars on September 29, 2005 at the office or agency of the Company referred to below, and to pay interest thereon on March 29, 2001 and thereafter, on September 29 and March 29 in each year, from September 29, 2000, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, at the rate of 11% per annum, until the principal hereof is paid or duly provided for. Notwithstanding anything contained herein, the rate of A-15 interest on the Securities shall not exceed the highest rate permitted by law. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the September 14 or March 14 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Any such interest not so punctually paid or duly provided for shall forthwith cease to be payable to the Holder on such Regular Record Date, and such defaulted interest may be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities not less than 10 days prior to such Special Record Date, or may be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture. Payment of the principal of (and premium, if any, on) and interest on this Security will be made at the office or agency of the Company maintained for that purpose in The City of New York, or at such other office or agency of the Company as may be maintained for such purpose, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that payment of interest may be made at the option of the Company (a) by check mailed to the address of the Person entitled thereto as such address shall appear on the Security Register or (b) by transfer to an account maintained by the payee located in the United States. Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been duly executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture, or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal. Dated: ______________ GB HOLDINGS INC. By -------------------------------------- Attest: ________________________________ Authorized Signature SECTION 203. Form of Reverse of Notes. ------------------------ This Security is one of a duly authorized issue of securities of the Company designated as its 11% Notes Due 2005 (herein called the "Securities"), limited (except as A-16 otherwise provided in the Indenture referred to below) in aggregate principal amount to $110 million, which may be issued under an indenture (herein called the "Indenture"), dated as of September 29, 2000 between the GB Property Funding Corp., GB Holdings, Inc. and Greate Bay Hotel and Casino, Inc. and Wells Fargo Bank Minnesota, National Association, trustee (herein called the "Trustee," which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties, obligations and immunities thereunder of the Company, the Trustee and the Holders of the Securities, and of the terms upon which the Securities are, and are to be, authenticated and delivered. Interest on the Securities shall be computed on the basis of a 360-day year of twelve 30-day months. The Securities are subject to redemption upon not less than 30 nor more than 60 days' notice, at any time after January 1, 2001, as a whole or in part, at the election of the Company, at a Redemption Price equal to 100% of the principal amount, together in the case of any such redemption with accrued, unpaid interest, if any, to the Redemption Date, all as provided in the Indenture. Each of the provisions of this Security is subject to and shall be enforced in compliance with the provisions of the Casino Control Act and the regulations promulgated thereunder, to the extent applicable. Each Holder by accepting a Security agrees that all Holders, whether initial holders or subsequent transferees, shall be subject to the qualification provisions of the Casino Control Act. As set forth more fully in the Indenture, in the event that the Casino Control Commission determines that a Holder is not qualified under the Casino Control Act, the Company shall have the absolute right and obligation to purchase from such Holder (the "Disqualified Holder") the Securities the Disqualified Holder may then possess, no later than forty-five days after the date that the Company serves notice on any Disqualified Holder of such determination. Immediately upon such determination, the Disqualified Holder shall have (a) no further right to exercise, directly or through any trustee or nominee, any right conferred by its Securities or (b) no further right to receive any dividends, interest, or other distribution or payment with respect to any such Securities. In the event a Disqualified Holder fails to so sell its Securities within 30 days after the determination by the Casino Control Commission, the Company shall purchase such Securities within 15 days after the end of such 30 day period at the lowest of (i) the principal amount thereof; (ii) the amount which the Disqualified Holder paid for the Securities, together with accrued interest up to the date of the determination of disqualification; or (c) the market value of such Securities. In the case of any redemption of Securities, interest installments whose Stated Maturity is on or prior to the Redemption Date will be payable to the Holders of such Securities, or one or more Predecessor Securities, of record at the close of business on the relevant Record Date referred to on the face hereof. Securities (or portions thereof) for whose redemption and payment provision is made in accordance with the Indenture shall cease to bear interest from and after the Redemption Date. In the event of redemption of this Security in part only, a new Security or Securities for the unredeemed portion hereof shall be issued in the name of the Holder hereof upon the cancellation hereof. A-17 If an Event of Default shall occur and be continuing, the principal of all the Securities may be declared due and payable in the manner and with the effect provided in the Indenture. The Indenture contains provisions for defeasance at any time of (a) the entire indebtedness of the Company on this Security and (b) certain restrictive covenants and the related Defaults and Events of Default, upon compliance by the Company with certain conditions set forth therein, which provisions apply to this Security. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in aggregate principal amount of the Securities at the time Outstanding. The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount of the Securities at the time Outstanding, on behalf of the Holders of all the Securities, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such amendment, modification, consent or waiver by or on behalf of the Holder of this Security, or otherwise in accordance with the terms of the Indenture, shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof whether or not notation thereof is made upon this Security. No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company which is absolute and unconditional, to pay the principal of (and premium, if any, on) and interest on this Security at the times, place, and rate, and in the coin or currency, herein prescribed. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registerable on the Security Register of the Company, upon surrender of this Security for registration of transfer at the office or agency of the Company maintained for such purpose in The City of New York, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities, of authorized denominations and for the same aggregate principal amounts will be issued to the designated transferee or transferees. The Securities are issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, the Securities are exchangeable for a like aggregate principal amount of Securities of a different authorized denomination, as requested by the Holder surrendering the same. No service charge shall be made for any registration of transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Prior to the time of due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this A-18 Security be overdue, and neither the Company, the Trustee nor any agent shall be affected by notice to the contrary. All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture. Each Guarantor (which term includes any successor Person under the Indenture) has unconditionally guaranteed, to the extent set forth in the Indenture and subject to the provisions in the Indenture, (a) the due and punctual payment of the principal of and interest on the Securities, whether at maturity, by acceleration or otherwise, the due and punctual payment of interest on overdue principal, and, to the extent permitted by law, interest, and the due and punctual performance of all other obligations of the Company to the Holders or the Trustee all in accordance with the terms set forth in the Indenture and (b) in case of any extension of time of payment or renewal of any Securities or any of such other obligations, that the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at Stated Maturity, by acceleration or otherwise. SECTION 204. Form of Trustee's Certificate of Authentication. ----------------------------------------------- The Trustee's certificate of authentication shall be in substantially the following form: TRUSTEE'S CERTIFICATE OF AUTHENTICATION. This is one of the Securities referred to in the within-mentioned Indenture. WELLS FARGO BANK, NATIONAL ASSOCIATION, AS TRUSTEE By: ------------------------------------ Authorized Officer ARTICLE THREE THE SECURITIES SECTION 301. Title and Terms. --------------- (a) The aggregate principal amount of securities which may be authenticated and delivered under this Indenture is limited to $110 million (reduced by the Exchanged Amount), except for securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other securities. (b) The Notes shall be known and designated as the "11% Notes Due 2005" of the Company. Their Stated Maturity shall be September 29, 2005, and they shall bear interest at the rate of 11% per annum from September 29, 2000, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, payable on March 29, 2001 and semiannually thereafter on September 29 and March 29 in each year and at said Stated Maturity, until the principal thereof is paid or duly provided for. A-19 (c) The principal of (and premium, if any, on) and interest on the Securities shall be payable at the office or agency of the Company maintained for such purpose in The City of New York, or at such other office or agency of the Company as may be maintained for such purpose; provided, however, that, at the option of the Company, interest may be paid by check mailed to addresses of the Persons entitled thereto as such addresses shall appear on the Security Register. (d) The Securities shall be redeemable as provided in Article Eleven. (e) If the Company is served with notice of the disqualification of any Holder under Section 105(d) of the Casino Control Act by the Casino Control Commission, such Holder will be prohibited under Section 105(e) of the Casino Control Act from (i) receiving interest on the Securities held by such Holder; (ii) exercising, directly or through any trustee or nominee, any right conferred on such Securities; and (iii) receiving any remuneration in any form from any Person licensed or qualified by the Casino Control Commission (including the Company, the Guarantors and the Trustee) for services rendered or otherwise. Notwithstanding the foregoing, the Trustee shall be entitled to exercise all rights with respect to the Securities held by such Holder including, but not limited to, accelerating the Securities (any monies or securities received by the Trustee on behalf of such Holder to be held in trust for such Holder pursuant to Section 605 hereof). If the Trustee exercises voting rights with respect to such Securities, such votes shall be cast in the same proportion as the votes of the other Outstanding Securities are cast on such issue. A copy of any notice served upon the Company as described above shall be promptly delivered by the Company to the Trustee. Any such notice to the Trustee shall be effective against the Trustee on the second Business Day after receipt thereof by a Responsible Officer of the Trustee. SECTION 302. Denominations. ------------- The Securities shall be issuable only in registered form without coupons and only in denominations of $1,000 and any integral multiple thereof. SECTION 303. Execution, Authentication, Delivery and Dating. ---------------------------------------------- The Securities shall be executed on behalf of the Company by its Chairman, its President, a Vice President, or the Chief Financial Officer. The signature of any officer on the Securities may be manual or facsimile signatures of the present or any future such authorized officer and may be imprinted or otherwise reproduced on the Securities. Securities bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities. At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities, and the Trustee in accordance with such Company Order shall authenticate and deliver such Securities. Each Security shall be dated the date of its authentication. A-20 No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Security a certificate of authentication substantially in the form provided for herein duly executed by the Trustee by manual signature of an authorized officer, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder and is entitled to the benefits of this Indenture. In case the Company, pursuant to Article Eight, shall be consolidated or merged with or into any other Person or shall convey, transfer, lease or otherwise dispose of its properties and assets substantially as an entirety to any Person, and the successor Person resulting from such consolidation, or surviving such merger, or into which the Company shall have been merged, or the Person which shall have received a conveyance, transfer, lease or other disposition as aforesaid shall have executed an indenture supplemental hereto with the Trustee pursuant to Article Eight, any of the Securities authenticated or delivered prior to such consolidation, merger, conveyance, transfer, lease or other disposition may, from time to time, at the request of the successor Person, be exchanged for other Securities executed in the name of the successor Person with such changes in phraseology and form as may be appropriate, but otherwise in substance of like tenor as the Securities surrendered for such exchange and of like principal amount; and the Trustee, upon Company Request of the successor Person, shall authenticate and deliver Securities as specified in such request for the purpose of such exchange. If Securities shall at any time be authenticated and delivered in any new name of a successor Person pursuant to this Section in exchange or substitution for or upon registration of transfer of any Securities, such successor Person, at the option of the Holders but without expense to them, shall provide for the exchange of all Securities at the time Outstanding for Securities authenticated and delivered in such new name. SECTION 304. Temporary Securities. -------------------- Pending the preparation of definitive Securities, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Securities which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as conclusively evidenced by their execution of such Securities. If temporary Securities are issued, the Company will cause definitive Securities to be prepared without unreasonable delay. After the preparation of definitive Securities, the temporary Securities shall be exchangeable for definitive Securities upon surrender of the temporary Securities at the office or agency of the Company designated for such purpose pursuant to Section 1002, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a like principal amount of definitive Securities of authorized denominations. Until so exchanged, the temporary Securities shall in all respects be entitled to the same benefits under this Indenture as definitive Securities. SECTION 305. Registration, Registration of Transfer and Exchange. --------------------------------------------------- A-21 The Company shall cause to be kept at the Corporate Trust Office of the Trustee a register (the register maintained in such office and in any other office or agency designated pursuant to Section 1002 being herein sometimes referred to as the "Security Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Securities and of transfers of Securities. The Security Register shall be in written form or any other form capable of being converted into written form within a reasonable time. At all reasonable times, the Security Register shall be open to inspection by the Trustee. The Trustee is hereby initially appointed as security registrar (the "Security Registrar") for the purpose of registering Securities and transfers of Securities as herein provided. Upon surrender for registration of transfer of any Security at the office or agency of the Company designated pursuant to Section 1002, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities of any authorized denomination or denominations of a like aggregate principal amount and like terms. At the option of the Holder, Securities may be exchanged for other Securities of any authorized denomination and of a like aggregate principal amount and like terms, upon surrender of the Securities to be exchanged at such office or agency. Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Securities which the Holder making the exchange is entitled to receive. All Securities issued upon any registration of transfer or exchange of Securities shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such registration of transfer or exchange. Every Security presented or surrendered for registration of transfer or for exchange shall (if so required by the Company or the Security Registrar) be duly endorsed, or be accompanied by a written instrument of transfer, in form satisfactory to the Company and the Security Registrar, duly executed by the Holder thereof or his attorney duly authorized in writing. No service charge shall be made for any registration of transfer or exchange or redemption of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Securities, other than exchanges not involving any transfer. The Company shall not be required (a) to issue, register the transfer of or exchange any Security during a period beginning at the opening of business 15 days before the selection of Securities to be redeemed under Section 1104 and ending at the close of business on the day of such mailing of the relevant notice of redemption or (b) to register the transfer of or exchange any Security so selected for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part. SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities. ------------------------------------------------ If (a) any mutilated Security is surrendered to the Trustee or (b) the Company and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Security, and A-22 there is delivered to the Company and the Trustee such security or indemnity as may be required by them to save each of them harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute and upon Company Order the Trustee shall authenticate and deliver, in exchange for any such mutilated Security or in lieu of any such destroyed, lost or stolen Security, a new Security of like tenor and principal amount, bearing a number not contemporaneously outstanding. In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security. Upon the issuance of any new Security under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. Every new Security issued pursuant to this Section in lieu of any destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all benefits of this Indenture equally and proportionately with any and all other Securities duly issued hereunder. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities. SECTION 307. Payment of Interest; Interest Rights Preserved. ---------------------------------------------- Interest on any Security which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name such Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest at the office or agency of the Company maintained for such purpose pursuant to Section 1002; provided, however, that each installment of interest may at the Company's option be paid by (a) mailing a check for such interest, payable to or upon the written order of the Person entitled thereto pursuant to Section 308, to the address of such Person as it appears in the Security Register or (b) transfer to an account maintained by the payee located in the United States. Any interest on any Security which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date shall forthwith cease to be payable to the Holder on the Regular Record Date by virtue of having been such Holder, and such defaulted interest ("Defaulted Interest") may be paid by the Company, at its election in each case, as provided in clause (i) or (ii) below: (i) the Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be A-23 paid on each Security and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this clause provided. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date, and in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be given in the manner provided for in Section 106, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so given, such Defaulted Interest shall be paid to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following clause (ii); or (ii) the Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such manner of payment shall be deemed practicable by the Trustee. Subject to the foregoing provisions of this Section, each Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security. SECTION 308. Persons Deemed Owners. --------------------- Prior to the due presentment of a Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name such Security is registered as the owner of such Security for the purpose of receiving payment of principal of (and premium, if any, on) and (subject to Sections 305 and 307) interest on such Security and for all other purposes whatsoever, whether or not such Security be overdue, and none of the Company, the Trustee or any agent of the Company or the Trustee shall be affected by notice to the contrary. SECTION 309. Cancellation. ------------ All Securities surrendered for payment, redemption, registration of transfer or exchange shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee and shall be promptly cancelled by it. The Company may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and may deliver to the Trustee (or to any other A-24 Person for delivery to the Trustee) for cancellation any Securities previously authenticated hereunder which the Company has not issued and sold, and all Securities so delivered shall be promptly cancelled by the Trustee. If the Company shall so acquire any of the Securities, however, such acquisition shall not operate as a redemption or satisfaction of the indebtedness represented by such Securities unless and until the same are surrendered to the Trustee for cancellation. No Securities shall be authenticated in lieu of or in exchange for any Securities cancelled as provided in this Section, except as expressly permitted by this Indenture. All cancelled Securities held by the Trustee shall be disposed of by the Trustee in accordance with its customary procedures and certification of their disposal delivered to the Company. SECTION 310. Computation of Interest. ----------------------- Interest on the Securities shall be computed on the basis of a 360-day year of twelve 30-day months. SECTION 311. Maximum Interest Rate. --------------------- Regardless of any provision contained herein or in the Securities, the Holders shall not be entitled to receive, collect or apply as interest (whether termed interest in the documents or deemed to be interest by judicial determination or operation of law) on the Securities, any amount in excess of the maximum amount allowed by applicable law, and, if any Holder ever receives, collects or applies as interest any such excess, the amount that would be excessive interest shall be deemed to be a partial prepayment of principal and treated hereunder as such; and, if the principal amount of the Securities is paid in full, any remaining excess shall forthwith be paid to the Company. In determining whether or not the interest paid or payable under any specific contingency exceeds the maximum amount of interest allowed by applicable law, the Company and the Holders shall, to the maximum extent permitted under applicable law, (a) characterize any nonprincipal payment as an expense fee, or premium rather than interest; (b) exclude voluntary prepayments and the effects thereof; and (c) amortize, prorate, allocate and spread, in equal parts, the total amount of interest throughout the entire contemplated term of the Securities. ARTICLE FOUR SATISFACTION AND DISCHARGE SECTION 401. Satisfaction and Discharge of Indenture. --------------------------------------- This Indenture shall upon Company Request cease to be of further effect (except as to surviving rights of registration of transfer or exchange of Securities herein expressly provided for) and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture when: (i) either (A) all Securities theretofore authenticated and delivered (other than (1) Securities which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 306 and (2) Securities for whose payment money has theretofore been deposited in trust with the A-25 Trustee or any Paying Agent or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 1003) have been delivered to the Trustee for cancellation; or (B) all such Securities not theretofore delivered to the Trustee for cancellation (1) have become due and payable, or (2) will become due and payable at their Stated Maturity within one year, or (3) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company, and the Company, in the case of (1), (2) or (3) above, has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust for the purpose an amount sufficient to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for principal (and premium, if any) and interest to the date of such deposit (in the case of Securities which have become due and payable) or to the Stated Maturity or Redemption Date, as the case may be; (ii) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and (iii) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for in this Section 401 relating to the satisfaction and discharge of this Indenture have been complied with. Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 606 and, if money shall have been deposited with the Trustee pursuant to subclause (b) of clause (1) of this Section, the obligations of the Trustee under Section 402 and the last paragraph of Section 1003, shall survive. SECTION 402. Application of Trust Money. -------------------------- Subject to the provisions of the last paragraph of Section 1003, all money and property deposited with the Trustee pursuant to Section 401 shall be held in trust and, at the direction of the Company, be invested prior to Maturity in United States Government Obligations, and applied by it, in accordance with the provisions of the Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium, if any) and interest for whose payment such money has been deposited with the Trustee; but such money need not be segregated from other funds except to A-26 the extent required by law. Any funds remaining following payment of all Securities and all other obligations of the Company hereunder shall be the property of the Company. ARTICLE FIVE REMEDIES SECTION 501. Events of Default. ----------------- "Event of Default," wherever used herein, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (i) default in the payment of any interest on any Security when it becomes due and payable, and continuance of such default for a period of 30 days; or (ii) default in the payment of any principal of (or premium, if any, on) any Security at its Maturity; or (iii) default in the performance, or breach, of any covenant or warranty of the Company in this Indenture (other than a default in the performance, or breach, of a covenant or warranty which is specifically dealt with elsewhere in this Section), and continuance of such default or breach for a period of 60 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of a majority in principal amount of the Outstanding Securities, a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder, unless the Company, is proceeding, and continues to proceed, diligently to cure any such default; or (iv) [intentionally omitted]; or (v) [intentionally omitted]; or (vi) [intentionally omitted]; or (vii) the entry of a decree or order by a court having jurisdiction in the premises adjudging the Company a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition or in respect of the Company under the Federal Bankruptcy Code or any other applicable federal or state law, or appointing a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Company or of any substantial part of its property, or ordering the winding up or liquidation of their respective affairs, and the continuance of any such decree or order unstayed and in effect for a period of 90 consecutive days; or (viii) the institution by the Company of proceedings to be adjudicated a bankrupt or insolvent, or the consent by it to the institution of bankruptcy or insolvency proceedings against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under the Federal Bankruptcy Code or any other A-27 applicable federal or state law or the consent by it to the filing of any such petition or to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Company or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due; or (ix) [intentionally omitted]; or (x) [intentionally omitted]; or (xi) [intentionally omitted]. SECTION 502. Acceleration of Maturity; Rescission and Annulment. -------------------------------------------------- If an Event of Default (other than an Event of Default specified in Section 501(vii) or 501(viii)) occurs and is continuing, then and in every such case, the Trustee and the Holders of not less than a majority in principal amount of the Securities Outstanding may declare the principal amount of all the Securities to be due and payable immediately, by a notice in writing to the Company, and upon any such declaration such principal amount shall become immediately due and payable. If an Event of Default specified in Section 501(vii) or 501(viii) occurs and is continuing, then the principal amount of all the Securities shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee and any Holder. At any time after a declaration of acceleration has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article provided, the Holders of a majority in principal amount of the Securities Outstanding, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if (i) the Company has paid or deposited with the Trustee a sum sufficient to pay, (A) all Defaulted Interest on all Outstanding Securities, (B) all unpaid principal of (and premium, if any, on) any Outstanding Securities which has become due otherwise than by such declaration of acceleration, and interest on such unpaid principal at the rate borne by the Securities; and (C) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel; and (ii) all Events of Default, other than the non-payment of amounts of principal of (or premium, if any, on) or interest on Securities which have become due solely by such declaration of acceleration, have been cured or waived as provided in Section 513. No such rescission shall affect any subsequent default or impair any right consequent thereon. SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee. ------------------------------------------------------ A-28 The Company covenants that if (i) default is made in the payment of any installment of interest on any Security when such interest becomes due and payable and such default continues for a period of 30 days, or (ii) default is made in the payment of the principal of (or premium, if any, on) any Security at the Maturity thereof, the Company will, upon demand of the Trustee, pay to the Trustee for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities for principal (and premium, if any) and interest, and interest on any overdue principal (and premium, if any), and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Company or any other obligor upon the Securities and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon the Securities, wherever situated. If an Event of Default occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in any Security Document or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. SECTION 504. Trustee May File Proofs of Claim. -------------------------------- In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company, or the property of the Company, the Trustee (irrespective of whether the principal of the Securities shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of overdue principal, premium, if any, or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise, (i) to file and prove a claim for the whole amount of principal (and premium, if any) and interest owing and unpaid in respect of the Securities and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and of the Holders allowed in such judicial proceeding; and (ii) to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; A-29 and any custodian, receiver, assignee, trustee, liquidator, sequestrator or similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 606. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. SECTION 505. Trustee May Enforce Claims Without Possession of Securities. ------------------------------------------------------ All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name and as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the holders of the Securities in respect of which such judgment has been recovered. SECTION 506. Application of Money Collected. ------------------------------ Any money and property collected by the Trustee pursuant to this Article or in connection with the exercise of remedies under any Security Document shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal (or premium, if any) or interest, upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: FIRST: To the payment of all amounts due the Trustee under Section 606; SECOND: To the payment of the amounts then due and unpaid for principal of (and premium, if any, on,) and interest on the Securities in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Securities for principal (and premium, if any) and interest, respectively; and THIRD: The balance, if any, to the Person or Persons entitled thereto. SECTION 507. Limitation on Suits. ------------------- No Holder of any Securities shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless: (i) the Holders of a majority in principal amount of the Outstanding Securities shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder; A-30 (ii) such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; (iii) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and (iv) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority or more in principal amount of the Outstanding Securities; it being understood and intended that no one or more Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Section 507 to affect, disturb or prejudice the rights of any other Holders, or to obtain or to seek to obtain priority or preference over any other Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all the Holders. SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and Interest. ------------------------------------------------------ Notwithstanding any other provision in this Indenture, the Holder of any of the Securities shall have the right, which is absolute and unconditional, to receive payment, as provided herein (including, if applicable, Article Thirteen) and in the terms of each note representing such Securities of the principal of (and premium, if any, on) and (subject to Section 307) interest on, such Securities on the respective Stated Maturities expressed in such Securities (or, in the case of redemption, on the Redemption Date) and to institute suit for the enforcement of any such payment, and such rights shall not be impaired without the consent of such Holder. SECTION 509. Restoration of Rights and Remedies. ---------------------------------- If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture or any Security Document and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Company, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted. SECTION 510. Rights and Remedies Cumulative. ------------------------------ Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities in the last paragraph of Section 306, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. A-31 SECTION 511. Delay or Omission Not Waiver. ---------------------------- No delay or omission of the Trustee or of any Holder of any Security to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or any Security Document or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be. SECTION 512. Control by Holders. ------------------ Notwithstanding anything to the contrary set forth in Section 316(a) of the TIA (the provisions of which are hereby excluded), the Holders of not less than a majority in principal amount of the Outstanding Securities shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee under this Indenture, provided that (i) such direction shall not be in conflict with any rule of law or with this Indenture; (ii) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction; and (iii) the Trustee need not take any action which might involve it in personal liability unless it has obtained appropriate indemnity. SECTION 513. Waiver of Defaults and Compliance. --------------------------------- Notwithstanding anything to the contrary set forth in Section 316(a) of the TIA (the provisions of which are hereby excluded) the Holders of not less than a majority in principal amount of the Outstanding Securities may on behalf of the Holders of all the Securities: (i) waive any past default hereunder and its consequences, except a default in respect of the payment of the principal of (or premium, if any, on) or interest on any Security, and upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured and released, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon; and (ii) waive future compliance with any term, provision or condition of this Indenture or any related instruments, agreements or documents (but no such waiver shall extend to or affect such term, provision or condition except to the extent so expressly waived), in which event the Company may omit to comply with any such term, provision or condition of this Indenture or any related instrument, agreement or document. A-32 ARTICLE SIX THE TRUSTEE SECTION 601. Notice of Defaults. ------------------ Within 90 days after the occurrence of any Default hereunder, the Trustee shall transmit in the manner and to the extent provided in TIA Section 313(c), notice of such Default hereunder known to the Trustee, unless such Default shall have been cured or waived; provided, however, that, except in the case of a Default in the payment of the principal of (or premium, if any, on) or interest on any Security, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Trustee in good faith determines that the withholding of such notice is in the interest of the Holders. The Trustee shall not be deemed to have knowledge of any Default or Event of Default hereunder unless a Responsible Officer in its Corporate Trust Department shall have actual knowledge thereof. SECTION 602. Certain Rights of Trustee. ------------------------- Subject to the provisions of TIA Sections 315(a) through 315(d): (i) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (ii) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution; (iii) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate; (iv) the Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (v) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (vi) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of A-33 indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney; (vii) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; and (viii) the Trustee shall not be liable for any action taken, suffered or omitted by it in good faith and believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture. The Trustee shall not be required to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. The Trustee and its directors, officers, employees and Affiliates shall cooperate with the Casino Control Commission and the Division of Gaming Enforcement and provide such information and documentation as may from time to time be requested by such agencies. The Trustee may rely on, and shall be protected with respect to any action taken or omitted to be taken in good faith in accordance with, the direction of the Holders of not less than a majority in principal amount of Outstanding Securities. SECTION 603. Trustee Not Responsible for Recitals or Issuance of Securities. ------------------------------------------------------ The recitals contained herein and in the Securities, except for the Trustee's certificates of authentication, shall be taken as the statements of the Company, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities, except that the Trustee represents that it is duly authorized to execute and deliver this Indenture, authenticate the Securities and perform its obligations hereunder and that the statements made by it in a Statement of Eligibility and Qualification of Form T-1 supplied to the Company are true and accurate, subject to the qualifications set forth therein. The Trustee shall not be accountable for the use or application by the Company of Securities or the proceeds thereof. SECTION 604. May Hold Securities. ------------------- The Trustee, any Paying Agent, any Security Registrar or any other agent of the Company or of the Trustee, in its individual or any other capacity, may become the owner or pledgee of Securities and, subject to TIA Sections 310(b) and 311, may otherwise deal with the Company with the same rights it would have if it were not Trustee, Paying Agent, Security Registrar or such other agent. A-34 SECTION 605. Money Held in Trust. ------------------- Except as otherwise provided herein, money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise provided herein or agreed with the Company. SECTION 606. Compensation and Reimbursement. ------------------------------ The Company agrees: (i) to pay to the Trustee from time to time such compensation as the Company and the Trustee shall from time to time agree for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); and (ii) except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or bad faith; and (iii) to indemnify the Trustee for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of this trust, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder or thereunder. The obligations of the Company under this Section to compensate the Trustee, to pay or reimburse the Trustee for expenses, disbursements and advances and to indemnify and hold harmless the Trustee shall constitute additional indebtedness hereunder and shall survive the satisfaction and discharge of this Indenture. As security for the performance of such obligations of the Company, the Trustee shall have a claim prior to the Securities upon all property and funds held or collected by the Trustee as such, except funds held in trust for the payment of principal of (and premium, if any, on) or interest on particular Securities. SECTION 607. Corporate Trustee Required: Eligibility. --------------------------------------- There shall at all times be a Trustee hereunder which shall be eligible to act as Trustee under TIA Section 310(a) and shall have a combined capital and surplus of at least $50,000,000. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of federal, state, territorial or District of Columbia supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. A-35 SECTION 608. Resignation and Removal; Appointment of Successor. ------------------------------------------------- (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section 609. (b) Subject to the provisions of the Casino Control Act, the Trustee may resign at any time by giving written notice thereof to the Company, the Casino Control Commission and the Division of Gaming Enforcement. If the instrument of acceptance by a successor Trustee required by Section 609 shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee. (c) Subject to the provisions of the Casino Control Act, the Trustee may be removed at any time by Act of the Holders of not less than a majority in principal amount of the Outstanding Securities, delivered to the Trustee and to the Company. (d) If at any time: (i) the Trustee shall fail to comply with the provisions of TIA Section 310(b) after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Security for at least six months; or (ii) the Trustee shall cease to be eligible under Section 607 and shall fail to resign after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Security for at least six months; or (iii) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, subject to the provisions of the Casino Control Act, (A) the Company, by a Board Resolution, may remove the Trustee or (B) subject to TIA Section 315(e), any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. (e) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, the Company, by a Board Resolution, shall promptly appoint a successor Trustee. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee shall be appointed by Act of the Holders of a majority in principal amount of the Outstanding Securities delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment, become the successor Trustee and supersede the successor Trustee appointed by the Company. If no successor Trustee shall have been so appointed by the Company or the Holders and accepted appointment in the manner hereinafter provided, any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee. Notwithstanding the foregoing, any successor Trustee may A-36 be appointed only with the prior, express approval of the Casino Control Commission, in consultation with the Division of Gaming Enforcement, provided that such successor Trustee must first be qualified as a financial source by and cooperate with the Casino Control Commission and the Division of Gaming Enforcement. (f) The Company shall give notice of each resignation and each removal of the Trustee and each appointment of a successor Trustee to the Holders of Securities in the manner provided for in Section 106. Each notice shall include the name of the successor Trustee and the address of its Corporate Trust Office. SECTION 609. Acceptance of Appointment by Successor. -------------------------------------- Every successor Trustee appointed hereunder shall take all necessary steps to be approved by the Casino Control Commission and shall execute, acknowledge and deliver to the Company, and to the retiring Trustee an instrument accepting such appointment, and the successor Trustee and the Company shall enter into a supplemental indenture evidencing the appointment of the successor Trustee. Thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder. Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts. No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article. SECTION 610. Merger, Conversion, Consolidation or Succession to Business. ------------------------------------------------------ Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such Securities; and in case at that time any of the Securities shall not have been authenticated, any successor Trustee may authenticate such Securities either in the name of any predecessor hereunder or in the name of the successor Trustee; and in all such cases such certificates shall have the full force which it is anywhere in the Securities or in this Indenture provided that the certificate of authentication of any predecessor Trustee or to authenticate Securities in the name of any predecessor Trustee shall apply only to its successor or successors by merger, conversion or consolidation. A-37 ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE, COMPANY AND GUARANTORS SECTION 701. Disclosure of Names and Addresses of Holders. -------------------------------------------- Every Holder of Securities, by receiving and holding the same, agrees with the Company and the Trustee that none of the Company or the Trustee or any agent of either of them shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the Holders in accordance with TIA Section 312, regardless of the source from which such information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under TIA Section 312(b). SECTION 702. Reports by Trustee. ------------------ (a) Within 60 days after May 15 of each year commencing with the first May 15 after the first issuance of Securities, the Trustee shall transmit to the Holders, in the manner and to the extent provided in TIA Section 313(c), a brief report, dated as of such May 15 if required by TIA Section 313(a). The Trustee shall transmit to the Holders, within the times hereinafter specified a brief report with respect to the following: (i) [intentionally omitted]; and (ii) the character and amount of any advances made by it as such since the date of the last report transmitted pursuant to the provisions of TIA Section 313(a) (or if no such report has yet been so transmitted, since the date of execution of the Indenture), for the reimbursement of which it claims or may claim a Lien or charge, prior to that of the Indenture Securities, on the trust estate or on property or funds held or collected by it as such Trustee, and which it has not previously reported pursuant to this clause (2), if such advances remaining unpaid at any time aggregate more than 10 per centum of the aggregate principal amount of the Securities Outstanding at such time, such report to be so transmitted within 90 days after such time. To the extent required by applicable laws, rules and regulations, a copy of each such report shall, at the time of such transmission to the Holders, be filed with each stock exchange, if any, upon which the Securities are listed, and also with the Commission. (b) The Trustee shall transmit by mail to the Casino Control Commission and the Division of Gaming Enforcement (i) an initial list of the beneficial Holders of the Securities promptly after the issuance of the Securities; (ii) current lists of the Holders appearing in the Security Register on a twice-per-year basis, no later than March 1 and September 1 of each year; and (iii) upon request by the Casino Control Commission or the Division of Gaming Enforcement, such additional information with respect to the beneficial Holders of the Securities as the Trustee may obtain through its good faith efforts. (c) The Trustee shall notify the Casino Control Commission and the Division of Gaming Enforcement, simultaneously with any notice given to the Holders, of any default or acceleration under the Securities, this Indenture or any other documents, instrument, agreement, A-38 covenant, or condition related to the issuance of the Securities, whether declared or effectuated by the Trustee or the Holders. The Trustee shall notify the Casino Control Commission and the Division of Gaming Enforcement on a continuing basis and in writing, of any actions taken by the Trustee or the Holders with regard to such default, acceleration or similar matters related thereto. (d) The Trustee shall notify the Casino Control Commission and the Division of Gaming Enforcement of the removal or resignation of the Trustee promptly after such removal or resignation. (e) The Trustee shall provide to the Casino Control Commission and the Division of Gaming Enforcement, promptly after the execution by the Trustee of the same, copies of any and all amendments or modifications to this Indenture, the Securities or any other documents, instrument, agreement, covenant or condition related to the issuance of the Securities. SECTION 703. Reports by Company. ------------------ The Company shall, to the extent required by the TIA: (i) file with the Trustee, within 15 days after the Company is required to file the same with the Commission, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) which the Company may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934; or, if the Company is not required to file information, documents or reports pursuant to either of said Sections, then it may, if it determines to do so, file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such of the supplementary and periodic information, documents and reports which may be required pursuant to Section 13 of the Securities Exchange Act of 1934 in respect of a security listed and registered on a national securities exchange as may be prescribed from time to time in such rules and regulations; (ii) file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such additional information, documents and reports with respect to compliance by the Company with the conditions and covenants of this Indenture as may be required from time to time by such rules and regulations; (iii) transmit by mail to all Holders, in the manner and to the extent provided in TIA Section 313(c), within 30 days after the filing thereof with the Trustee, such summaries of any information, documents and reports required to be filed by the Company, as the case may be, pursuant to paragraphs (i) and (ii) of this Section as may be required by rules and regulations prescribed from time to time by the Commission; and (iv) comply in all material respects with all requirements and provisions of the Casino Control Act and notify the Trustee by mail of all formal hearings and formal proceedings materially relating to the Company before the Casino Control Commission relating to the plenary casino licenses for the Company, as the same are A-39 scheduled. Such notice shall be in writing and given at least seven days prior to the hearing to which such notice relates, unless a shorter notice is given to the Company in which event the Company shall notify the Trustee promptly upon receiving such definite information as shall be contained in such notice. The Company hereby agrees that the Trustee may, but shall have no obligation to, attend such hearings and other proceedings if permitted to do so by the Casino Control Commission. ARTICLE EIGHT CONSOLIDATION AND MERGER SECTION 801. Company May Merge and Consolidate. --------------------------------- The Company shall not consolidate with or merge with or into any Person or group of Persons in a single transaction or through a series of transactions, except that: (i) The Company may consolidate with or merge with or into any Person or group of Persons in a single transaction or through a series of transactions if (A) the Company shall be the continuing Person, or the resulting or surviving Person (the "surviving entity") shall be a Person organized and existing under the laws of the United States or any State thereof or the District of Columbia; (B) the surviving entity (other the Company) shall expressly assume, by a supplemental indenture executed and delivered to the Trustee, in form and substance reasonably satisfactory to the Trustee, all of the obligations of the Company under the Securities, and this Indenture; and (C) immediately before and immediately after giving effect to such transaction, or series of transactions (including, without limitation, any Indebtedness incurred or anticipated to be incurred in connection with or in respect of, such transaction or series of transactions), no Default or Event of Default shall have occurred and be continuing; (ii) [intentionally omitted]; and (iii) the Company or such Person shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation or merger and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture, comply with this covenant and that all conditions precedent herein provided for relating to such transaction have been complied with. SECTION 802. Successor Substituted. --------------------- Upon any consolidation of the Company with or merger of the Company with or into any other Person in accordance with Section 801, the successor Person formed by such consolidation or merger shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein. A-40 ARTICLE NINE SUPPLEMENTAL INDENTURES SECTION 901. Supplemental Indentures and Amendments Without Consent of Holders. ------------------------------------------------------ Without the consent of any Holders, the Company, when it is so authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the Trustee, for any of the following purposes: (i) to evidence the succession of another Person to the Company and the assumption by any such successor of the covenants of the Company, contained herein and in the Securities; or (ii) to add to the covenants of the Company for the benefit of the Holders or to surrender any right or power herein conferred upon the Company; or (iii) to add any additional Events of Default; or (iv) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee pursuant to the requirements of Section 609; or (v) to cure any ambiguity, to correct or supplement any provision herein which may be inconsistent with any other provision herein, or to make any other provisions with respect to matters or questions arising under this Indenture; provided that such action shall not adversely affect the interests of the Holders in any material respect; or (vi) [intentionally omitted]; or (vii) to add any guarantor; or (viii) to make any other change that does not adversely affect the rights of any Holder; or (ix) to secure the Securities. SECTION 902. Supplemental Indentures and Amendments with Consent of Holders. ------------------------------------------------------ Upon the request of the Company, by a Board Resolution authorizing the execution thereof, together with the consent of the Holders of not less than a majority in principal amount of the Outstanding Securities, by Act of said Holders delivered to the Trustee, the Trustee shall join the Company in an indenture or indentures supplemental hereto, for any purpose, including, without limitation, for the purpose of adding any provisions to or changing, modifying or amending in any manner or eliminating any of the provisions of this Indenture or making additions to, changing, modifying, amending or eliminating in any manner the rights of the Holders hereunder; provided, however, that no such supplemental indenture, or addition, change, amendment or modification to, or elimination of any provision of, shall, without the consent of the Holder of each Outstanding Security affected thereby: A-41 (i) change the Stated Maturity of the principal of, or any installment of interest on, any Security, or reduce the principal amount thereof or the rate of interest thereon or any premium payable upon the redemption thereof, or change the coin or currency in which any Security or any premium or the interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date); or (ii) reduce the percentage in principal amount of the Outstanding Securities, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences provided for in this Indenture; or (iii) modify any of the provisions of this Section or Section 513, except to increase any such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Outstanding Security affected thereby. It shall not be necessary for any Act of Holders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof. SECTION 903. Execution of Supplemental Indentures and Amendments. --------------------------------------------------- In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture and all conditions precedent herein provided for relating to such supplemental indenture have been complied with. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture which affects the Trustee's own rights, duties, or immunities under this Indenture or otherwise. SECTION 904. Effect of Supplemental Indentures. --------------------------------- Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. SECTION 905. Conformity with Trust Indenture Act. ----------------------------------- Every supplemental indenture executed pursuant to the Article shall conform to the requirements of the Trust Indenture Act. SECTION 906. Reference in Securities to Supplemental Indentures. -------------------------------------------------- Securities authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If A-42 the Company shall so determine, new Securities so modified as to conform, in the opinion of the Trustee and the Company, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Securities. SECTION 907. Notice of Supplemental Indentures and Amendments. ------------------------------------------------ Promptly after the execution by the Company and the Trustee of any supplemental indenture or amendment pursuant to the provisions of Section 902, the Company shall give notice thereof to the Holders of each Outstanding Security affected, in the manner provided for in Section 106, setting forth in general terms the substance of such supplemental indenture or amendment. ARTICLE TEN COVENANTS SECTION 1001. Payment of Principal, Premium, if any, and Interest. --------------------------------------------------- The Company covenants and agrees for the benefit of the Holders that it will duly and punctually pay the principal of (and premium, if any, on) and interest on the Securities in accordance with the terms of the Securities and this Indenture. SECTION 1002. Maintenance of Office or Agency. ------------------------------- The Company will maintain in The City of New York an office or agency where Securities may be presented or surrendered for payment, where Securities may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Securities and this Indenture may be served. The Corporate Trust Office of the Trustee shall be such office or agency of the Company, unless the Company shall designate and maintain some other office or agency for one or more of such purposes. The Company will give prompt written notice to the Trustee of any change in the location of any such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands. The Company may also from time to time designate one or more other offices or agencies (in or outside of The City of New York) where the Securities may be presented or surrendered for any or all such purposes and may from time to time rescind any such designation; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in The City of New York for such purposes. The Company will give prompt written notice to the Trustee of any such designation or rescission and any change in the location of any such other office or agency. SECTION 1003. Money for Security Payments to Be Held in Trust. ----------------------------------------------- If the Company shall at any time act as its own Paying Agent, it will, on or before each due date of the principal of (and premium, if any, on) or interest on any of the Securities, A-43 segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal (and premium, if any) or interest so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided and will promptly notify the Trustee of its action or failure so to act. Whenever the Company shall have one or more Paying Agents for the Securities, it will, on or before each due date of the principal of (and premium, if any, on), or interest on, any Securities, deposit with a Paying Agent a sum sufficient to pay the principal (and premium, if any) or interest so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such principal, premium or interest, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of such action or any failure so to act. The Company will cause each Paying Agent (other than the Trustee) to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will: (i) hold all sums held by it for the payment of the principal of (and premium, if any on) or interest on Securities in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided; (ii) give the Trustee notice of any default by the Company (or any other obligor upon the Securities) in the making of any payment of principal (and premium, if any) or interest; and (iii) at any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent. The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such sums. Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of (and premium, if any, on) or interest on any Security and remaining unclaimed for two years after such principal (and premium, if any) or interest has become due and payable shall be paid to the Company on Company Request, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in the Borough of Manhattan, The City of New York, notice that such money remains unclaimed and that, after a A-44 date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Company. SECTION 1004. Corporate Existence. ------------------- Subject to Article Eight, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect the corporate existence, rights (charter and statutory) and franchises of the Company; provided, however, that the Company shall not be required to preserve any such right or franchise if the Board of Directors of the Company shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and that the loss thereof is not disadvantageous in any material respect to the Company. SECTION 1005. Payment of Taxes and Other Claims. --------------------------------- The Company will pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (a) all taxes, assessments and governmental charges levied or imposed upon the Company or upon the income, profits or property of the Company and (b) all lawful claims for labor, materials and supplies, which, if unpaid, might by law become a lien upon the property of the Company; provided, however, that the Company shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings. SECTION 1006. Maintenance of Properties. ------------------------- Subject to and as permitted by the terms of this Indenture the Company will cause all properties owned by the Company or used or held for use in the conduct of its business to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof as in the judgment of the Company may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided, however, that nothing in this Section shall prevent the Company from discontinuing the maintenance of any of such properties if such discontinuance is, in the judgment of the Company, desirable in the conduct of its business and not disadvantageous in any material respect to the Holders. SECTION 1007. [Intentionally Omitted.] SECTION 1008. Statement by Officer as to Compliance. ------------------------------------- The Company will deliver to the Trustee, within 120 days after the end of each fiscal year, a brief certificate, which may be in the form attached as Exhibit A, from the principal executive officer, principal financial officer or principal accounting officer as to his or her knowledge of the Company's compliance with all conditions and covenants under this Indenture. For purposes of this Section 1008, such compliance shall be determined without regard to any period of grace or requirement of notice under this Indenture. SECTION 1009. Statement by Officers of Certain Defaults. ----------------------------------------- When any Default has occurred and is continuing under this Indenture, or if the trustee for or the holder of any other evidence of Indebtedness of the Company gives any notice or takes any other action with respect to a claimed default (other than with respect to A-45 Indebtedness in the principal amount of less than $5 million), the Company shall deliver to the Trustee by registered or certified mail or by telegram, telex or facsimile transmission an Officers' Certificate specifying such event, notice or other action within five Business Days of its occurrence. SECTION 1010. [Intentionally Omitted.] SECTION 1011. [Intentionally Omitted.] SECTION 1012. [Intentionally Omitted.] SECTION 1013. Limitation on Restricted Payments. --------------------------------- The Company shall not make any Restricted Payment if an Event of Default shall have occurred and be continuing at the time of such Restricted Payment. SECTION 1014. [Intentionally Omitted.] SECTION 1015. [Intentionally Omitted.] SECTION 1016. [Intentionally Omitted.] SECTION 1017. Limitation on Asset Sales. ------------------------- Subject to and as permitted by the terms of this Indenture the Company shall not make any Asset Sale of its properties unless (a) the consideration received in the Asset Sale is equal to Fair Market Value; (b) the proceeds therefrom consist of at least 85% cash and/or Cash Equivalents; and (c) unless otherwise expressly provided herein, the Net Cash Proceeds of such Asset Sale shall be: (i) applied in the manner described in the following paragraph; or (ii) retained by the Company to apply to the payment on its Securities when due. On or before the 180th day after the date on which the Company consummates the relevant Asset Sale and subject to and as permitted by the terms of this Indenture, the Company shall use all of the Net Cash Proceeds from such Asset Sale (other than amounts that the Company has determined to retain pursuant to clause (ii) of the preceding paragraph) to make either (a) an offer to purchase (the "Asset Sale Offer") from all holders of Securities up to a maximum principal amount (expressed as a multiple of $1,000) of Securities equal to such Net Cash Proceeds at a purchase price equal to 100% of the principal amount thereof plus accrued and unpaid interest thereon, if any, to the date of purchase or (b) a Permitted Investment; provided, that the Company shall not be required to make any Asset Sale Offer if the Net Cash Proceeds of all Asset Sales that are not used to make a Permitted Investment within 180 days, do not exceed $5 million. Each Asset Sale Offer shall remain open for a period of at least 20 business days. If the Asset Sale Offer is more than fully subscribed to by the Holders of the Securities, the particular Securities to be accepted shall be selected by such method as the Trustee shall deem fair and appropriate and which may provide for the selection of portions of the principal of Securities; provided, however, that no such partial acceptance shall reduce the portion of the principal amount of a Security not redeemed to less than, $1,000; and provided further that so long as the Securities are listed on any national securities exchange (as such term is defined in the Exchange Act), such selection shall be made by the Trustee in accordance with the provisions of such exchange. A-46 SECTION 1018. [Intentionally Omitted.] SECTION 1019. [Intentionally Omitted.] SECTION 1020. [Intentionally Omitted.] SECTION 1021. [Intentionally Omitted.] SECTION 1022. [Intentionally Omitted.] SECTION 1023. [Intentionally Omitted.] SECTION 1024. [Intentionally Omitted.] SECTION 1025. [Intentionally Omitted.] SECTION 1026. [Intentionally Omitted.] SECTION 1027. [Intentionally Omitted.] ARTICLE ELEVEN REDEMPTION OF SECURITIES SECTION 1101. Optional Redemption. ------------------- The Securities may be redeemed, at the election of the Company, as a whole or from time to time in part, at the times, subject to the conditions and at the Redemption Price specified in the form of Security, together with accrued interest to the Redemption Date. SECTION 1102. Applicability of Article. ------------------------ Redemption of Securities at the election of the Company or otherwise, as permitted or required by any provision of this Indenture, shall be made in accordance with such provision and this Article, other than repurchases made from time to time in the open market. SECTION 1103. Election to Redeem; Notice to Trustee. ------------------------------------- The election of the Company to redeem any Securities pursuant to Section 1101 shall be evidenced by a Board Resolution. In case of any redemption at the election of the Company, the Company shall, at least 60 days prior to the Redemption Date fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee of such Redemption Date and of the principal amount of Securities to be redeemed and shall deliver to the Trustee such documentation and records as shall enable the Trustee to select the Securities to be redeemed pursuant to Section 1104. SECTION 1104. Selection by Trustee of Securities to Be Redeemed. ------------------------------------------------- If less than all the Securities are to be redeemed, the particular Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee, from the Outstanding Securities not previously called for redemption, by such method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of portions of the principal of Securities; provided, however, that no such partial redemption A-47 shall reduce the portion of the principal amount of a Security not redeemed to less than $1,000 and, provided further that, so long as the Securities are listed on any national securities exchange (as such term is defined in the Exchange Act), any such redemption shall be made by the Trustee in accordance with the provisions of such exchange. The Trustee shall promptly notify the Company in writing of the Securities selected for redemption and, in the case of any Securities selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to redemption of Securities shall relate, in the case of any Security redeemed or to be redeemed only in part, to the portion of the principal amount of such Security which has been or is to be redeemed. SECTION 1105. Notice of Redemption. -------------------- Notice of redemption shall be given in the manner provided for in Section 106 not less than 30 nor more than 60 days prior to the Redemption Date, to each Holder of Securities to be redeemed; provided, however, that in the case of an optional redemption in which the Company has called for redemption all outstanding Securities in connection with a refinancing of such Securities, the Company shall be permitted to (a) specify a proposed redemption date; (b) change the proposed redemption date once to a final redemption date by notice mailed to Holders not later than five business days prior to the final redemption date; (c) establish the final redemption date as a date not more than 90 days after the first notice from the Company calling the Securities for optional redemption was mailed to Holders; and (d) rescind the redemption offer at any time prior to the final redemption date, which rescission shall not cause the maturity of the Securities to have changed. All notices of redemption shall state: (i) the Redemption Date; (ii) the Redemption Price; (iii) if less than all Outstanding Securities are to be redeemed, the identification (and, in the case of a partial redemption, the principal amounts) of the particular Securities to be redeemed; (iv) that on the Redemption Date the Redemption Price (together with accrued interest, if any, to the Redemption Date payable as provided in Section 1107) will become due and payable upon each such Security, or the portion thereof, to be redeemed, and that interest thereon will cease to accrue on and after said date; and (v) the place or places where such Securities are to be surrendered for payment of the Redemption Price. Notice of redemption of Securities to be redeemed at the election of the Company shall be given by the Company or, at the Company's request, by the Trustee in the name and at the expense of the Company. A-48 SECTION 1106. Deposit of Redemption Price. --------------------------- Prior to any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 1003) in immediately available funds an amount of money sufficient to pay the Redemption Price of, and accrued interest on, all the Securities which are to be redeemed on that date. SECTION 1107. Securities Payable on Redemption Date. ------------------------------------- Notice of redemption having been given as aforesaid, the Securities so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified (together with accrued interest, if any, to the Redemption Date), and from and after such date (unless the Company shall default in the payment of the Redemption Price and accrued interest) such Securities shall cease to bear interest. Upon surrender of any such Security for redemption in accordance with said notice, such Security shall be paid by the Company at the Redemption Price, together with accrued interest, if any, to the Redemption Date; provided, however, that installments of interest whose Stated Maturity is on or prior to the Redemption Date shall be payable to the Holders of such Securities, or one or more Predecessor Securities, registered as such at the close of business on the relevant Record Dates according to their terms and the provisions of Section 307. If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal (and premium, if any) shall, until paid, bear interest from the Redemption Date at the rate borne by the Securities. SECTION 1108. Securities Redeemed in Part. --------------------------- Any Security which is to be redeemed only in part shall be surrendered at the office or agency of the Company maintained for such purpose pursuant to Section 1002 (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or such Holder's attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and deliver to the Holder of such Security without service charge, a new Security or Securities, of any authorized denomination as requested by such Holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Security so surrendered. SECTION 1109. Redemption Pursuant to Gaming Laws. ---------------------------------- (a) If required to qualify by the Casino Control Commission, all Holders, whether initial Holders or subsequent transferees, shall be subject to the qualification provisions of the Casino Control Act relating to financial sources and/or security holders. In the event that the Casino Control Commission determines that a Holder is not qualified under the Casino Control Act and/or such Holder fails to submit for qualification as required by the Casino Control Commission in its sole discretion, the Company shall have the absolute right and obligation to purchase from such Holder (the "Disqualified Holder") the Securities the Disqualified Holder may then possess, either directly, indirectly or beneficially, no later than forty-five days after the date the Company serves notice on any Disqualified Holder of such determination. Immediately upon such determination, the Disqualified Holder shall have no further right (i) to exercise, A-49 directly or indirectly, through any trustee or nominee or any other person or entity, any right conferred by any Securities and (ii) to receive any dividends, interest, or any other distribution or payment with respect to any such Securities or any remuneration in any form from the Company or the Trustee; provided, however, that after such disqualification, interest on any such Securities shall continue to accrue for the benefit of any subsequent Holder thereof. The Company shall promptly provide to the Trustee a copy of each notice served to a Disqualified Holder. (b) Upon receipt of the notice referred to in clause (a) above, the Disqualified Holder may sell its Securities either directly to any Person then qualified or previously qualified (and not subsequently disqualified) or through a bona fide brokerage transaction, conducted at arm's-length, to a Person not an Affiliate of the Disqualified Holder. In the event the Disqualified Holder fails to so sell its Securities within thirty (30) days after the determination by the Casino Control Commission, the Company shall purchase such Securities within fifteen (15) days after the end of such thirty (30) day time period, at a time and place as designated by the Company, at the lowest of (i) the principal amount thereof; (ii) the amount which the Disqualified Holder or beneficial owner paid for the Securities, together with accrued interest up to the date of the determination of disqualification; or (iii) the market value of such Securities. The right of the Company to purchase such Security may be assigned by the Company to any Person approved by the Casino Control Commission. (c) The provisions of this Section shall be construed in accordance with the applicable provisions of the Casino Control Act. ARTICLE TWELVE [INTENTIONALLY OMITTED] ARTICLE THIRTEEN DEFEASANCE AND COVENANT DEFEASANCE SECTION 1301. Company's Option to Effect Defeasance or Covenant Defeasance. ----------------------------------------------------- The Company may, at its option by Board Resolution, at any time, with respect to the Securities, elect to have either Section 1302 or Section 1303 be applied to all Outstanding Securities upon compliance with the conditions set forth below in this Article Thirteen. SECTION 1302. Defeasance and Discharge. ------------------------ Upon the Company's exercise under Section 1301 of the option applicable to this Section 1302, the Company shall be deemed to have been discharged from its obligations with respect to all Outstanding Securities on the date the conditions set forth in Section 1304 are satisfied (hereinafter, "defeasance"). For this purpose, such defeasance means that the Company shall be deemed to have paid and discharged the entire indebtedness represented by the Outstanding Securities, which shall thereafter be deemed to be "Outstanding" only for the purposes of Section 1305 and the other Sections of this Indenture referred to in (a) and (b) below, and to have satisfied all its other obligations under such Securities and this Indenture insofar as such Securities are concerned (and the Trustee, at the expense of the Company, shall execute A-50 proper instruments acknowledging the same), except for the following, which shall survive until otherwise terminated or discharged hereunder: (a) the rights of Holders of Outstanding Securities to receive, solely from the trust fund described in Section 1304 and as more fully set forth in such Section, payments in respect of the principal of (and premium, if any, on) and interest on such Securities when such payments are due; (b) the Company's obligations with respect to such Securities under Sections 304, 305, 306, 1002 and 1003; (c) the rights, powers, trusts, duties and immunities of the Trustee hereunder; and (d) this Article Thirteen. Subject to compliance with this Article Thirteen, the Company may exercise its option under this Section 1302 notwithstanding the prior exercise of its option under Section 1303 with respect to the Securities. SECTION 1303. Covenant Defeasance. ------------------- Upon the Company's exercise under Section 1301 of the option applicable to this Section 1303, the Company shall be released from its obligations under any covenant contained in Section 801 and in Sections 1005 through 1026 with respect to the Outstanding Securities on and after the date the conditions set forth below are satisfied (hereinafter, "covenant defeasance"), and the Securities shall thereafter be deemed not to be "Outstanding" for the purposes of any direction, waiver, consent or declaration or Act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed "Outstanding" for all other purposes hereunder. For this purpose, such covenant defeasance means that, with respect to the Outstanding Securities, the Company may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Section 501(3) or otherwise, but, except as specified above, the remainder of this Indenture and such Securities shall be unaffected thereby. SECTION 1304. Conditions to Defeasance or Covenant Defeasance. ----------------------------------------------- The following shall be the conditions to application of either Section 1302 or Section 1303 to the Outstanding Securities: (i) The Company shall irrevocably have deposited or caused to be deposited with the Trustee (or another trustee satisfying the requirements of Section 607 who shall agree to comply with the provisions of this Article Thirteen applicable to it) as trust funds, for a period of at least 123 days prior to the date of such defeasance, in trust for the purpose of making the following payments, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of such Securities, (A) money in an amount; or (B) U.S. Government Obligations which through the scheduled payment of principal and interest in respect thereof in accordance with their terms will provide, not later than one day before the due date of any payment, money in an amount; or (C) a combination thereof, sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge, and which shall be applied by the Trustee (or other qualifying trustee) to pay and discharge, (i) the principal of (and premium, if any, on) and interest on the A-51 Outstanding Securities on the Stated Maturity (or Redemption Date, if applicable) of such principal (and premium, if any) or installment of interest and (ii) any mandatory sinking fund payments or analogous payments applicable to the Outstanding Securities on the day on which such payments are due and payable in accordance with the terms of this Indenture and of such Securities; provided that the Trustee shall have been irrevocably instructed to apply such money or the proceeds of such U.S. Government Obligations to said payments with respect to the Securities. Before such a deposit the Company may give to the Trustee, in accordance with Section 1103 hereof, a notice of its election to redeem all of the Outstanding Securities at a future date in accordance with Article Eleven hereof, which notice shall be irrevocable. Such irrevocable redemption notice, if given, shall be given effect in applying the foregoing. For this purpose, "U.S. Government Obligations" means securities that are (1) direct obligations of the United States of America for the timely payment of which its full faith and credit is, pledged or (2) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the timely payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case, are not callable or redeemable at the option of the issuer thereof, and shall also include a depository receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act of 1933, as amended), as custodian with respect to any such U.S. Government Obligation or a specific payment of principal of or interest on any such U.S. Government Obligation held by such custodian for the account of the holder of such depository receipt, provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the U.S. Government Obligation or the specific payment of principal of or interest on the U.S. Government Obligation evidenced by such depository receipt. (ii) No Default or Event of Default with respect to the Securities shall have occurred and be continuing on the date of such deposit or, insofar as paragraphs (7) and (8) of Section 501 hereof are concerned, at any time during the period ending on the 123rd day after the date of such deposit (it being understood that this condition shall not be deemed satisfied until the expiration of such period). (iii) Such defeasance or covenant defeasance shall not result in a breach or violation of, or constitute a default under, this Indenture or any other material agreement or instrument to which the Company is a party or by which it is bound. (iv) In the case of an election under Section 1302, the Company shall have delivered to the Trustee an Opinion of Counsel stating that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (B) there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Outstanding Securities will not recognize income, gain or loss for federal income tax purposes as a result of such defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such defeasance had not occurred. A-52 (v) In the case of an election under Section 1303, the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that the Holders of the Outstanding Securities will not recognize income, gain or loss for federal income tax purposes as a result of such covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred. (vi) The Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for relating to either the defeasance under Section 1302 or the covenant defeasance under Section 1303 (as the case may be) have been complied with. SECTION 1305. Deposited Money and U.S. Government Obligations To Be Held in Trust; Other Miscellaneous Provisions. ----------------------------------------------------- Subject to the provisions of the last paragraph of Section 1003, all money and U.S. Government Obligations (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 1305, the "Trustee") pursuant to Section 1304 in respect of the Outstanding Securities shall be held in trust and applied by the Trustee, in accordance with the provisions of such Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Holders of such Securities of all sums due and to become due thereon in respect of principal (and premium, if any) and interest, but such money need not be segregated from other funds except to the extent required by law. The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the U.S. Governmental Obligations deposited pursuant to Section 1304 or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the Outstanding Securities. Anything in this Article Thirteen to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon Company Request any money or U.S. Government Obligations held by it as provided in Section 1304 which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, are in excess of the amount thereof which would then be required to be deposited to effect an equivalent defeasance or covenant defeasance, as applicable, in accordance with this Article. SECTION 1306. Reinstatement. ------------- If the Trustee or any Paying Agent is unable to apply any money in accordance with Section 1305 by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company's obligations under this Indenture and the Securities shall be revived and reinstated as though no deposit had occurred pursuant to Section 1302 or 1303, as the case may be, until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 1305; provided, however, that if the Company makes any payment of principal of (or premium, if any, on) or interest on any Security following the reinstatement of its obligations, the Company shall be A-53 subrogated to the rights of the Holders of such Securities to receive such payment from the money held by the Trustee or Paying Agent. ARTICLE FOURTEEN [INTENTIONALLY OMITTED] ARTICLE FIFTEEN MISCELLANEOUS SECTION 1501. Counterparts. ------------ This Indenture may be signed in any number of counterparts each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same Indenture. A-54 IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written. GB HOLDINGS, INC. By ------------------------------------- Title: Attest: ________________________________ Title: WELLS FARGO BANK, NATIONAL ASSOCIATION By ------------------------------------- Title: A-55 EXHIBIT A - -------------------------------------------------------------------------------- OFFICERS' CERTIFICATE OF GB HOLDINGS, INC. - -------------------------------------------------------------------------------- Reference is made to that certain Indenture, dated as of ____________________ (the "Indenture") among GB Holdings, Inc. (the "Company") and Wells Fargo Bank, National Association, as successor by merger to Wells Fargo Bank Minnesota, National Association, as Trustee (the "Trustee"). Except as otherwise defined herein, capitalized terms used herein shall have the meanings set forth in the Indenture. Pursuant to Section 1008 of the Indenture, the undersigned officer of the Company hereby certifies to the Trustee as follows: He is now, and at the times mentioned herein has been, the duly elected, qualified and acting officer of the Company as specified below. To his knowledge, and without regard to any period of grace or requirements of notice under the Indenture, the Company is in compliance with all conditions and covenants under the Indenture. IN WITNESS WHEREOF, I have set my hand this ____ day of __________. GB HOLDINGS, INC. By ------------------------------------- EX-4.5 3 file003.txt SECOND AMENDED AND RESTATED INDENTURE ================================================================================ GB HOLDINGS INC. and WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee -------------- Second Amended and Restated Indenture Dated as of July 22, 2004 -------------- $43,741,030 11% Notes Due 2005 ================================================================================ GB HOLDINGS, INC. RECONCILIATION AND TIE BETWEEN TRUST INDENTURE ACT OF 1939 AND INDENTURE, DATED AS OF JULY 22, 2004
TIA INDENTURE SECTION SECTION - ------- ---------------- 310 (a)(1).................................................................................607 (a)(2).................................................................................607 (a)(3).................................................................................N.A. (a)(4).................................................................................N.A. (a)(5).................................................................................607 (b)....................................................................................604, 608 (c)....................................................................................N.A. 311 .......................................................................................604 312 .......................................................................................701 313 .......................................................................................601, 702 314 (a)....................................................................................703, 1008 (b)....................................................................................N.A. (c)(1).................................................................................102 (c)(2).................................................................................102 (c)(3).................................................................................N.A. (d)....................................................................................N.A. (e)....................................................................................102 (f)....................................................................................N.A. 315 (a)....................................................................................602 (b)....................................................................................601 (c)....................................................................................602 (d)....................................................................................602 (e)....................................................................................N.A. 316 (a)(last sentence).....................................................................101("Outstanding") (a)(1) (A).............................................................................512 (a)(1) (B).............................................................................513 (a)(2).................................................................................N.A. (b)....................................................................................508 (c)....................................................................................104(d) 317 (a)(1).................................................................................503 (a)(2).................................................................................504 (b)....................................................................................1003 318 (a)....................................................................................111
- -------------- Note: This reconciliation and tie shall not, for any purpose, be deemed to be a part of the Indenture. TABLE OF CONTENTS (1)
PARTIES........................................................................................................1 RECITALS.......................................................................................................1 ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION Section 101. Definitions.....................................................................................1 Section 102. Compliance Certificates and Opinions............................................................10 Section 103. Form of Documents Delivered to Trustee..........................................................11 Section 104. Acts of Holders.................................................................................11 Section 105. Notices, etc., to Trustee, Company and Guarantors...............................................13 Section 106. Notice to Holders; Waiver.......................................................................13 Section 107. Effect of Headings and Table of Contents........................................................14 Section 108. Successors and Assigns..........................................................................14 Section 109. Separability Clause.............................................................................14 Section 110. Benefits of Indenture...........................................................................14 Section 111. Governing Law...................................................................................14 Section 112. Legal Holidays..................................................................................14 Section 113. Casino Control Act..............................................................................14 ARTICLE TWO SECURITY FORMS Section 201. Forms Generally.................................................................................15 Section 202. Form of Face of Notes...........................................................................15 Section 203. Form of Reverse of Notes........................................................................17 Section 204. Form of Trustee's Certificate of Authentication.................................................19 ARTICLE THREE THE SECURITIES Section 301. Title and Terms.................................................................................19 Section 302. Denominations...................................................................................20 Section 303. Execution, Authentication, Delivery and Dating..................................................20 Section 304. Temporary Securities............................................................................21 - ------------------------ (1) THIS TABLE OF CONTENTS SHALL NOT, FOR ANY PURPOSE, BE DEEMED TO BE A PART OF THIS INDENTURE. Section 305. Registration, Registration of Transfer and Exchange.............................................22 Section 306. Mutilated, Destroyed, Lost and Stolen Securities................................................23 Section 307. Payment of Interest; Interest Rights Preserved..................................................23 Section 308. Persons Deemed Owners...........................................................................24 Section 309. Cancellation....................................................................................24 Section 310. Computation of Interest.........................................................................25 Section 311. Maximum Interest Rate...........................................................................25 ARTICLE FOUR SATISFACTION AND DISCHARGE Section 401. Satisfaction and Discharge of Indenture..........................................................25 Section 402. Application of Trust Money.......................................................................26 ARTICLE FIVE REMEDIES Section 501. Events of Default................................................................................27 Section 502. Acceleration of Maturity; Rescission and Annulment...............................................28 Section 503. Collection of Indebtedness and Suits for Enforcement by Trustee..................................29 Section 504. Trustee May File Proofs of Claim.................................................................29 Section 505. Trustee May Enforce Claims Without Possession of Securities......................................30 Section 506. Application of Money Collected...................................................................30 Section 507. Limitation on Suits..............................................................................30 Section 508. Unconditional Right of Holders to Receive Principal, Premium and Interest........................31 Section 509. Restoration of Rights and Remedies...............................................................31 Section 510. Rights and Remedies Cumulative...................................................................31 Section 511. Delay or Omission Not Waiver.....................................................................32 Section 512. Control by Holders...............................................................................32 Section 513. Waiver of Defaults and Compliance................................................................32 ARTICLE SIX THE TRUSTEE Section 601. Notice of Defaults...............................................................................33 Section 602. Certain Rights of Trustee........................................................................33 Section 603. Trustee Not Responsible for Recitals or Issuance of Securities...................................34 Section 604. May Hold Securities..............................................................................34 Section 605. Money Held in Trust..............................................................................35 Section 606. Compensation and Reimbursement...................................................................35 Section 607. Corporate Trustee Required: Eligibility..........................................................35 Section 608. Resignation and Removal; Appointment of Successor................................................36 Section 609. Acceptance of Appointment by Successor...........................................................37 Section 610. Merger, Conversion, Consolidation or Succession to Business......................................37 ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE, COMPANY AND GUARANTORS Section 701. Disclosure of Names and Addresses of Holders.....................................................38 Section 702. Reports by Trustee...............................................................................38 Section 703. Reports by Company...............................................................................38 ARTICLE EIGHT CONSOLIDATION AND MERGER Section 801. Company May Merge and Consolidate................................................................40 Section 802. Successor Substituted............................................................................40 ARTICLE NINE SUPPLEMENTAL INDENTURES Section 901. Supplemental Indentures and Amendments Without Consent of Holders................................41 Section 902. Supplemental Indentures and Amendments with Consent of Holders...................................41 Section 903. Execution of Supplemental Indentures and Amendments..............................................42 Section 904. Effect of Supplemental Indentures................................................................42 Section 905. Conformity with Trust Indenture Act..............................................................42 Section 906. Reference in Securities to Supplemental Indentures...............................................42 Section 907. Notice of Supplemental Indentures and Amendments.................................................43 ARTICLE TEN COVENANTS Section 1001. Payment of Principal, Premium, if any, and Interest.............................................43 Section 1002. Maintenance of Office or Agency.................................................................43 Section 1003. Money for Security Payments to Be Held in Trust.................................................44 Section 1004. Corporate Existence.............................................................................45 Section 1005. Payment of Taxes and Other Claims...............................................................45 Section 1006. Maintenance of Properties.......................................................................45 Section 1007. [Intentionally Omitted].........................................................................45 Section 1008. Statement by Officers as to Compliance..........................................................45 Section 1009. Statement by Officers of Certain Defaults.......................................................45 Section 1010. [Intentionally Omitted].........................................................................46 Section 1011. [Intentionally Omitted].........................................................................46 Section 1012. [Intentionally Omitted].........................................................................46 Section 1013. Limitation on Restricted Payments...............................................................46 Section 1014. [Intentionally Omitted].........................................................................46 Section 1015. [Intentionally Omitted].........................................................................46 Section 1016. [Intentionally Omitted].........................................................................46 Section 1017. Limitation on Asset Sales.......................................................................46 Section 1018. [Intentionally Omitted].........................................................................47 Section 1019. [Intentionally Omitted].........................................................................47 Section 1020. [Intentionally Omitted].........................................................................47 Section 1021. [Intentionally Omitted].........................................................................47 Section 1022. [Intentionally Omitted].........................................................................47 Section 1023. [Intentionally Omitted].........................................................................47 Section 1024. [Intentionally Omitted].........................................................................47 Section 1025. [Intentionally Omitted].........................................................................47 Section 1026. [Intentionally Omitted].........................................................................47 Section 1027. [Intentionally Omitted].........................................................................47 ARTICLE ELEVEN REDEMPTION OF SECURITIES Section 1101. Optional Redemption.............................................................................47 Section 1102. Applicability of Article........................................................................47 Section 1103. Election to Redeem; Notice to Trustee...........................................................47 Section 1104. Selection by Trustee of Securities to Be Redeemed...............................................47 Section 1105. Notice of Redemption............................................................................38 Section 1106. Deposit of Redemption Price.....................................................................49 Section 1107. Securities Payable on Redemption Date...........................................................49 Section 1108. Securities Redeemed in Part.....................................................................49 Section 1109. Redemption Pursuant to Gaming Laws..............................................................49 ARTICLE TWELVE [INTENTIONALLY OMITTED] ARTICLE THIRTEEN DEFEASANCE AND COVENANT DEFEASANCE Section 1301. Company's Option to Effect Defeasance or Covenant Defeasance....................................50 Section 1302. Defeasance and Discharge........................................................................50 Section 1303. Covenant Defeasance.............................................................................51 Section 1304. Conditions to Defeasance or Covenant Defeasance.................................................51 Section 1305. Deposited Money and U.S. Government Obligations To Be Held in Trust; Other Miscellaneous Provisions...................................................................................53 Section 1306. Reinstatement...................................................................................53 ARTICLE FOURTEEN INTENTIONALLY OMITTED ARTICLE FIFTEEN MISCELLANEOUS Section 1501. Counterparts....................................................................................54 EXHIBIT A TESTIMONIUM...................................................................................................... SIGNATURE AND SEALS..............................................................................................
SECOND AMENDED AND RESTATED INDENTURE, dated as of July 22, 2004 among GB Holdings, Inc. (herein called the "Company"), successor by merger (the "Merger") to GB Property Funding Corp. (herein called "Funding"), and Greate Bay Hotel and Casino, Inc. (herein called "GBHC," and, together with Funding, herein called the "Merged Companies"), which is a corporation duly organized and existing, under the laws of the State of Delaware, and having its principal office c/o Sands Hotel and Casino at Indiana Avenue & Brighton Park, Atlantic City, New Jersey 08401, and Wells Fargo Bank, National Association, as successor by merger to Wells Fargo Bank Minnesota, National Association (herein called the "Trustee"). The Company, the Merged Companies and the Trustee were parties to an Amended and Restated Indenture, dated as of October 12, 2001 (the "First Amended and Restated Indenture") which was further amended by Amendment No. 1 thereto ("Amendment No. 1"). Funding authorized and issued its 11% Notes Due 2005 (herein called "Notes" or the "Securities"), under an indenture, dated as of September 29, 2000 (the "Original Indenture") of substantially the tenor and amount set forth in the Original Indenture in the original principal amount of $110 million. As a result of an exchange transaction completed on or about the date of this indenture, the remaining outstanding principal amount of the Notes is $43,741,030. To provide therefor, the Company has duly authorized the execution and delivery of the Original Indenture, as amended and restated by the Amended and Restated Indenture, as further amended by Amendment No. 1 to the First Amended and Restated Indenture and this Second Amended and Restated Indenture (this "Indenture"). Each of GBHC and the Company were guarantors of the Securities. By virtue of the Merger of GBHC and Funding into the Company, the Company has succeeded to all of the obligations of GBHC and Funding in respect of the Securities and has become the obligor thereof. Any reference herein or in any of the Securities to the Company, GBHC, Holdings "Guarantors" or any guarantor or issuer of the Notes shall, for all purposes, be deemed to refer only to the Company. This Indenture is subject to the provisions of the Trust Indenture Act of 1939, as amended, that are required to be part of this Indenture and shall, to the extent applicable, be governed by such provisions. For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities, as follows: ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION SECTION 101. Definitions. ----------- For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires: (i) the terms defined in this Article have the meanings assigned to them in this Article, and include the plural as well as the singular; (ii) all other terms used herein which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein, and the terms "cash transaction" and "self-liquidating paper," as used in TIA Section 311, shall have the meanings assigned to them in the rules of the Commission adopted under the Trust Indenture Act; (iii) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles, and, except as otherwise herein expressly provided, the term "generally accepted accounting principles" with respect to any computation required or permitted hereunder shall mean such accounting principles as are generally accepted at the date of such computation; (iv) [intentionally omitted]; and (v) the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. "Act," when used with respect to any Holder, has the meaning specified in Section 104. "Affiliate" of any Person means any other Person that, directly or indirectly, controls, is controlled by or is under direct or indirect common control with, such Person and with respect to any natural Person, any other Person having a relationship by blood, marriage or adoption, not more remote than first cousins with such natural Person. For the purposes of this definition, "control" when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of Voting Stock or other equity interests, by contract or otherwise, and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Asset Sale" means, as applied to any Person, any direct or indirect sale, conveyance, transfer, lease or other disposition (other than a Sale-Leaseback Transaction) by such Person or any Subsidiary of such Person to any Person other than such Person or a wholly-owned Subsidiary of such Person, in one transaction or a series of related transactions, of any Capital Stock of any Subsidiary of such Person or other similar equity interest of such Subsidiary or any other property or asset of such Person or any Subsidiary of such Person; provided that the term "Asset Sale" shall not include (a) sales, conveyances, transfers, leases or other dispositions in the ordinary course of business; (b) all other dispositions pursuant to which such Person receives, directly or indirectly, Net Cash Proceeds or fair market value of less than or equal to $5,000,000 in the aggregate in any twelve month period; (c) sales, conveyances, transfers, leases or other dispositions of CRDA Investments; and (d) sales, conveyances, transfers, leases or other dispositions by either Atlantic Coast Entertainment Holdings, Inc., ACE Gaming, LLC, or any of its or their Subsidiaries. "Assets" means, as applied to any Person, any tangible or intangible assets, or rights or real or personal properties of such Person or any of its Subsidiaries including capital stock of Subsidiaries. 2 "Board of Directors" means either the board of directors of a Person or any duly authorized committee of that board. "Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of a Person to have been duly adopted by the Board of Directors of such Person and to be in full force and effect on the date of such certification, and delivered to the Trustee. "Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in The City of New York or the State of New Jersey are authorized or obligated by law or executive order to close. "Capital Stock" means, with respect to any Person, any and all shares, interests, participations, rights in, or other equivalents (however designated and whether voting or non-voting) of, such Person's capital stock, whether outstanding on the Issue Date or issued after such date, and any and all rights, warrants or options exchangeable for or convertible into such capital stock. "Capitalized Lease Obligation" means any obligation to pay rent or other amounts under a lease of (or other agreement conveying the right to use) any property (whether real, personal or mixed) that is required to be classified and accounted for as a capital lease obligation under GAAP, and, for the purpose hereof, the amount of such obligation at any date of determination shall be the capitalized amount thereof at such date, determined in accordance with GAAP. "Cash Equivalents" means any of the following, to the extent owned by Holdings or any of its Subsidiaries free and clear of all Liens (other than Liens in favor of the Trustee or the Holders) and having a maturity of not greater than 270 days from the date of acquisition: (a) any evidence of Indebtedness issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (provided that the full faith and credit of the United States of America is pledged in support thereof): (b) insured certificates of deposit or acceptances of any commercial bank that is a member of the Federal Reserve System, that issues (or the parent of which issues) commercial paper rated as described in clause (c) below and that has combined capital and surplus and undivided profits of not less than $100,000,000; (c) commercial paper issued by a corporation (except an Affiliate of Holdings) organized under the laws of any state of the United States or the District of Columbia and rated at least A-1 (or the then equivalent grade) by Standard & Poor's Corporation or at least Prime-1 (or the then equivalent grade) by Moody's Investors Service, Inc.; and (d) repurchase agreements and reverse repurchase agreements relating to marketable direct obligations issued or unconditionally guaranteed by the United States government or issued by any agency thereof (provided that the full faith and credit of the United States of America is pledged in support thereof); provided that the terms of such agreements comply with the guidelines set forth in the Federal Financial Agreements of Depository Institutions with Securities Dealers and Others, as adopted by the Comptroller of the Currency. "Casino Control Act" means the New Jersey Casino Control Act, N.J. Stat. Ann. 5:12-1 et seq. (New Jersey Public Law 1977, C.110), and the regulations promulgated thereunder, N.J.A.C. 19:40-1.1 et seq., as from time to time amended, or any successor provision of law. 3 "Casino Control Commission" means the New Jersey Casino Control Commission as established by Section 50 of the Casino Control Act or any successor agency appointed pursuant to the Casino Control Act. "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Securities Exchange Act of 1934, or, if at any time after the execution of this Indenture such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time. "Common Stock" means, with respect to any Person, any and all shares, interests, participations and other equivalents (however designated, whether voting or non-voting) of such Person's common stock, whether now outstanding or issued after the Issue Date, and includes, without limitation, all series and classes of such common stock. "Company" means GB Holdings, Inc., until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean such successor Person. "Company Request" or "Company Order" means a written request or order signed in the name of the Company by its Chairman, its President, any Vice President, its Treasurer or an Assistant Treasurer, and delivered to the Trustee. "Corporate Trust Office" means the principal corporate trust office of the Trustee, at which at any particular time its corporate trust business shall be administered, which office at the date of execution of this Indenture is located at 6th and Marquette, MAC N9303-120, Minneapolis, MN 55479, except that with respect to presentation of Securities for payment or for registration of transfer or exchange, such term shall mean the office or agency of the Trustee at which, at any particular time, its corporate agency business shall be conducted. "Corporation" includes corporations, associations, companies and business trusts. "CRDA Investments" means Investments in securities issued by, and monies deposited with, the Casino Reinvestment Development Authority of the State of New Jersey. "Default" means any Event of Default, or an event that would constitute an Event of Default but for the requirement that notice be given or time elapse or both. "Defaulted Interest" has the meaning specified in Section 307. "Disqualified Holders" shall have the meaning provided in Section 1109. "Disqualified Stock" means, with respect to any Person, any Capital Stock or other similar ownership or profit interest that, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is exchangeable for Indebtedness, or is redeemable at the option of the holder thereof, in whole or in part, on or before the Maturity Date of the Securities. "Division of Gaming Enforcement" means the Division of Gaming Enforcement of the New Jersey Department of Law and Public Safety as established by Section 55 of the Casino Control Act or any successor division or agency. 4 "Event of Default" has the meaning specified in Section 501. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Exchanged Amount" means the principal amount of Securities exchanged in the Exchange Offer. "Exchange Offer" means that certain offer for the exchange of Notes set forth in a prospectus of Atlantic Coast Entertainment Holdings, Inc., dated June 1, 2004. "Fair Market Value" or "fair value" means either, (a) with respect to any asset or property, the price which could be negotiated in an arm's-length free market transaction, for cash, between a willing seller and a willing buyer, neither of whom is under undue pressure or compulsion to complete the transaction (the "Arm's Length Value") as determined by the Board of Directors of the Company acting in good faith and evidenced by a Board Resolution delivered to the Trustee or (b) with respect to any asset or property, any value within a range of values determined to reflect the Arm's Length Value by an investment banking firm retained by the Company or the Board. "Federal Bankruptcy Code" means the 1978 Bankruptcy Act of Title 11 of the United States Code, as amended from time to time. "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board that are applicable as of the Issue Date. "Gaming Authority" means any agency, authority, board, bureau, commission, department, office or instrumentality of any nature whatsoever of the United States federal government or foreign government, any state, province or any city or other political subdivision or otherwise and whether now or hereafter in existence, or any officer or official thereof with authority to regulate any gaming operation (or proposed gaming operation) owned, managed, or operated by Holdings or any of its Subsidiaries. "Gaming Laws" means each gaming law of any applicable Gaming Authority as amended from time to time, and the regulations promulgated and rulings issued thereunder applicable to Holdings or any of its Subsidiaries or shareholders. "Holder" means a Person in whose name a Security is registered in the Security Register. "incur" means to directly or indirectly create, assume, suffer to exist, guarantee in any manner, or in any manner become liable for the payment of. "Indebtedness" of any Person means (a) any liability, contingent or otherwise, of such Person (whether or not the recourse of the lender is to the whole of the assets of such Person, or only to a portion thereof), (i) for borrowed money evidenced by a note, bond, debenture or similar instrument, letters of credit, acceptances or other similar facilities (other than a trade payable or a current liability incurred in the ordinary course of business) or (ii) for the payment of money relating to a Capitalized Lease Obligation or other obligation relating to the deferred purchase price of property or services (including a purchase money obligation); (b) any liability 5 of others of the kind described in the preceding clause (a) which such Person has guaranteed including, without limitation, (i) to pay or purchase such liability; (ii) to supply funds to or in any other manner invest in the debtor (including an agreement to pay for property or services irrespective of whether such property is received or such services are rendered; and (iii) to purchase, sell or lease (as lessee or lessor) property or to purchase or sell services, primarily for the purpose of enabling a debtor to make a payment of such Indebtedness or to assure the holder of such Indebtedness against loss; (c) any obligation secured by a Lien to which the property or assets of such Person are subject, whether or not the obligations secured thereby shall have been assumed by or shall otherwise be such Person's legal liability; (d) all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any Capital Stock of or other ownership or profit interest in such Person or any of its Affiliates or any warrants, rights or options to acquire such Capital Stock, valued, in the case of Disqualified Stock, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends; (e) all Interest and Currency Rate Protection Obligations; and (f) any and all deferrals, renewals, extensions and refundings of any liability of the kind described in any of the preceding clauses. "Indenture" means this instrument as originally executed and as it may from time to time be supplemented, changed, modified or amended (by any addition to or elimination of, the provisions hereof, or otherwise) by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof. "Independent," when used with respect to any Person, means such other Person who (a) does not have any material financial interest in the Company or in any Affiliate of the Company and (b) is not an officer, employee, promoter, underwriter, trustee, partner or person performing similar functions for the Company or a spouse, family member or other relative of any such Person; provided, that with respect to any director of any corporation, such director shall also be deemed to be "Independent" if such director meets the requirements for independence established by any "national securities exchange" (as contemplated in the Securities Exchange Act of 1934) for audit committee membership. Whenever it is provided in this Indenture that any Independent Person's opinion or certificate shall be furnished to the Trustee, such Person shall be appointed by the Company. "Interest and Currency Rate Protection Obligations" means the obligations of any Person pursuant to any interest rate swap, cap or collar agreement, interest rate future or option contract, currency swap agreement, currency future or option contract and other similar agreement designed to hedge against fluctuations in interest rates or foreign exchange rates. "Interest Payment Date" means the Stated Maturity of an installment of interest on the Securities. "Investment" in any Person means any direct or indirect loan, advance, guarantee or other extension of credit or capital contribution to (including, without limitation, transfers of cash or other property to others or payments for property or services for the account or use of others (excluding unbilled or uncollected receivables), or otherwise), or purchase or acquisition of Capital Stock, warrants, rights, options, bonds, notes, debentures or other securities or evidences of Indebtedness issued by, any other Person or Indebtedness of any other Person secured by (or for which the holder of such Indebtedness has an existing right, contingent or 6 otherwise, to be secured by) any Lien (including, without limitation, accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness. "Issue Date" means September 29, 2000. "Lien" means any mortgage, lien (statutory or other), pledge, security interest, encumbrance, hypothecation, assignment for security, or other security agreement of any kind or nature whatsoever. For purposes of this Indenture, a Person shall be deemed to own subject to a Lien any property which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, or other title retention agreement relating to such Person. "Maturity," when used with respect to any Security, means the date on which the principal of such Security or an installment of principal becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, notice of redemption or otherwise. "Maturity Date," when used with respect to any Security, means the date specified in such Security as the fixed date on which the final installment of principal of such Security is due and payable. "Net Cash Proceeds" means, with respect to any Asset Sale the proceeds thereof in the form of cash or Cash Equivalents received by the Company (whether as initial consideration, through the payment or disposition of deferred compensation or the release of reserves), after deducting therefrom (without duplication): (a) reasonable and customary brokerage commissions, underwriting fees and discounts, legal fees, finders fees and other similar fees and expenses incurred in connection with such Asset Sale; (b) provisions for all taxes payable as a result of such Asset Sale; (c) payments made to retire Indebtedness (other than payments on the Securities) secured by the assets subject to such Asset Sale to the extent required pursuant to the terms of such Indebtedness; and (d) appropriate amounts to be provided by the Company as a reserve, in accordance with GAAP, against any liabilities associated with such Asset Sale and retained by the Company after such Asset Sale, including, without limitation, pension and other post-employment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations associated with such Asset Sale, in each case to the extent, but only to the extent, that the amounts so deducted are, at or around the time of receipt of such cash or Cash Equivalents, actually paid to a Person that is not an Affiliate of the Company or, in the case of reserves, are actually established and, in each case, are properly attributable to such Asset Sale . "Officers' Certificate" for any Person means a certificate signed by the Chairman, the President, Executive Vice President or a Vice President, and by the Chief Financial Officer or the Secretary of such Person, and delivered to the Trustee. "Opinion of Counsel" means a written opinion of counsel for the Company or any of the Guarantors or any of their respective Affiliates, including an employee of any such Person, or any other counsel reasonably acceptable to the Trustee. "Outstanding," when used with respect to Securities, means, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except: 7 (i) Securities theretofore cancelled by the Trustee or delivered to the Trustee for cancellation; (ii) Securities, or portions thereof, for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Securities; provided that, if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made; (iii) Securities, except to the extent provided in Sections 1302 and 1303, with respect to which the Company has effected defeasance and/or covenant defeasance as provided in Article Thirteen; and (iv) Securities in respect of which, pursuant to Section 306, other Securities have been authenticated and delivered pursuant to this Indenture, other than any such Securities in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Securities are held by a bona fide purchaser in whose hands the Securities are valid obligations of the Company; provided, however, that in determining whether the Holders of the requisite principal amount of Outstanding Securities have given any request, demand, authorization, direction, consent, notice or waiver hereunder or taken any other action, Securities owned by Holdings or its Subsidiaries shall be disregarded and deemed not to be Outstanding (but the Securities of any other Affiliates shall be deemed for all such purposes to be Outstanding). In determining whether the Trustee shall be protected in making such calculation or in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities owned by Holdings or its Subsidiaries which the Trustee knows to be so owned shall be so disregarded. Securities owned by Holdings or its Subsidiaries which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Securities and that the pledgee is not the Company, a Guarantor or a Subsidiary of Holdings. "Paying Agent" means any Person (including the Company acting as Paying Agent) authorized by the Company to pay the principal of (and premium, if any, on) or interest on any Securities on behalf of the Company. "Permitted Investment" means the direct or indirect acquisition, repair or restoration of property or other Assets (including, without limitation, Securities of any person possessing any such Asset or with rights to, any Assets). "Person" means an individual, partnership, corporation (including a business trust), joint stock company, trust, unincorporated association, joint venture or other entity, or a government or any political subdivision or agency thereof. "Predecessor Security" of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security; and, for the purposes of this definition, any Security authenticated and delivered under Section 306 in 8 exchange for a mutilated security or in lieu of a lost, destroyed or stolen Security shall be deemed to evidence the same debt as the mutilated, lost, destroyed or stolen Security. "Redemption Date," when used with respect to any Security to be redeemed, in whole or in part, means the date fixed for such redemption by or pursuant to this Indenture. "Redemption Price," when used with respect to any Security to be redeemed, means 100% of the principal amount of such Security, together with accrued, unpaid interest. "Regular Record Date" for the interest payable on any Interest Payment Date means the September 14 or March 14 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. "Responsible Officer," when used with respect to the Trustee, means the chairman or any vice-chairman of the board of directors, the chairman or any vice-chairman of the executive committee of the board of directors, the chairman of the trust committee, the president, any vice president, the secretary, any assistant secretary, the treasurer, any assistant treasurer, the cashier, any assistant cashier, any trust officer or assistant trust officer, the controller or any assistant controller or any other officer of the Trustee customarily performing functions similar to those performed by any of the above-designated officers, and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Restricted Payment" means either of the following: (a) the declaration or payment of any dividend or any other distribution on Common Stock of the Company or any payment made to the direct or indirect holders (in their capacities as such) of Common Stock of the Company in respect of that stock (other than dividends or distributions payable solely in Capital Stock (other than Disqualified Stock) or (b) the purchase, defeasance, redemption or other acquisition or retirement for value of any Common Stock of the Company. "Sale-Leaseback Transaction" means any arrangement with any Person providing for the leasing by Holdings or any Subsidiary of any real or tangible personal property, which property has been or is to be sold or transferred by the Company to such Person or its Affiliates in contemplation of such leasing. "Securities" has the meaning stated in the first recital of this Indenture and more particularly means any Securities authenticated and delivered under this Indenture. "Security Register" and "Security Registrar" have the respective meanings specified in Section 305. "Special Record Date" for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 307. "Stated Maturity," when used with respect to any Security or any installment of principal thereof or interest thereon, means the date specified in such Security as the fixed date on which the principal of such Security or such installment of principal or interest is due and payable, including pursuant to any mandatory redemption provision (but excluding any provision providing for the repurchase of such security at the option of the holder thereof). 9 "Subsidiary" of any Person means any corporation, partnership, joint venture, trust or estate of which (or in which) more than 50% of (a) the issued and outstanding Capital Stock having ordinary voting power to elect a majority of the Board of Directors of such corporation (irrespective of whether at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency); (b) the interest in the capital or profits of such partnership or joint venture; or (c) the beneficial interest in such trust or estate, is at the time directly or indirectly owned or controlled by such Person, by such Person and one or more of its other Subsidiaries or by one or more of such Person's other Subsidiaries. "Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939, as amended from time to time. "Trustee" means the Person named as the "Trustee" in the first paragraph of this Indenture until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean such successor Trustee. "United States Government Obligations" means securities which are (a) direct obligations of the United States of America for the payment of which its full faith and credit is pledged or (b) obligations of a Person, the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America. "Vice President," when used with respect to the Company or the Trustee, means any vice president, whether or not designated by a number or a word or words added before or after the title "vice president." "Voting Stock" of any Person means Capital Stock of such Person which ordinarily has voting power for the election of directors (or persons performing similar functions) of such Person, whether at all times or only as long as no senior class of securities has such voting power by reason of any contingency. SECTION 102. Compliance Certificates and Opinions. ------------------------------------ Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall furnish to the Trustee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Indenture (including any covenant compliance with which constitutes a condition precedent) relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or request, no additional certificate or opinion need be furnished. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than pursuant to Section 1008) shall include: (i) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto; (ii) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; 10 (iii) a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (iv) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. SECTION 103. Form of Documents Delivered to Trustee. -------------------------------------- In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. SECTION 104. Acts of Holders. --------------- (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture or otherwise to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by agents duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section. (b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where 11 such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustee deems sufficient. (c) The principal amount and serial numbers of Securities held by any Person, and the date of holding the same, shall be proved by the Security Register. (d) If the Company shall solicit from the Holders of Securities any request, demand, authorization, direction, notice, consent, waiver or other Act, the Company may, at its option, by or pursuant to Board Resolution, fix in advance a record date for the determination of Holders entitled to give such request, demand, authorization, direction, notice, consent, waiver or other Act, but the Company shall have no obligation to do so. Notwithstanding TIA Section 316(c), such record date shall be the record date specified in or pursuant to such Board Resolution, which shall be a date not earlier than the date 30 days prior to the first solicitation of Holders generally in connection therewith and not later than the date such solicitation is completed. If such a record date is fixed, such request, demand, authorization, direction, notice, consent, waiver or other Act may be given before or after such record date, but only the Holders of record at the close of business on such record date shall be deemed to be Holders for the purposes of determining whether Holders of the requisite proportion of Outstanding Securities have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, waiver or other Act, and for that purpose the Outstanding Securities shall be computed as of such record date; provided that no such authorization, agreement or consent by the Holders on such record date shall be deemed effective unless it shall become effective pursuant to the provisions of this Indenture not later than eleven months after the record date. (e) Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefore or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Security. (f) For the purpose of the Company complying with any requirement of the Casino Control Commission, or the Division of Gaming Enforcement or of the Casino Control Act, every holder, intermediary holder, intermediary beneficial holder and beneficial holder of a Security shall be deemed to authorize any Holder and any other holder, intermediary holder, intermediary beneficial holder and beneficial holder of a Security, upon written request of an Officer of the Company, or the Trustee expressing reliance on this Section and enclosing a copy of this Section, to release, and any such holder, intermediary holder, intermediary beneficial holder and beneficial holder shall be required to release, to the Company, or the Trustee, as the case may be, the name, address, telephone number, principal contact person, and amount of such holdings, intermediary holdings, intermediary beneficial holdings and beneficial holdings of Securities of each such holder, intermediary holder, intermediary beneficial holder and beneficial holder of a Security. SECTION 105. Notices, etc., to Trustee, Company and Guarantors. ------------------------------------------------- 12 Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with, (i) the Trustee by any Holder or the Company shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with the Trustee at its Corporate Trust Office, Attention: Corporate Trust Administration, or (ii) the Company by the Trustee or by any Holder shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to the Company addressed to it at the address of its principal office specified in the first paragraph of this Indenture, with a copy to: Sands Hotel and Casino, Indiana Avenue and Brighton Park, Atlantic City, N.J. 08401, or at any other address previously furnished in writing to the Trustee by the Company. SECTION 106. Notice to Holders; Waiver. ------------------------- Where this Indenture provides for notice of any event to Holders, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder affected by such event, at his address as it appears in the Security Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Any notice mailed to a Holder in the manner herein prescribed shall be conclusively deemed to have been received by such Holder, whether or not such Holder actually receives such notice. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case by reason of the suspension of or irregularities in regular mail service or by reason of any other cause, it shall be impracticable to mail notice of any event to Holders when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Trustee shall be deemed to be a sufficient giving of such notice for every purpose hereunder. Any notices hereunder that are required to be given to the Casino Control Commission shall be addressed to: Document Control Unit, Casino Control Commission, Tennessee Avenue and the Boardwalk, Arcade Building, Atlantic City, New Jersey 08401, Attention: Chief of Administrative Operations. Any notices hereunder that are required to be given to the Division of Gaming Enforcement shall be addressed to: Division of Gaming Enforcement, 140 East Front Street, CN-047, Trenton, New Jersey 08625, Attention: Deputy Director for the Division of Gaming Enforcement. SECTION 107. Effect of Headings and Table of Contents. ---------------------------------------- 13 The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. SECTION 108. Successors and Assigns. ---------------------- All covenants and agreements in this Indenture shall bind its successors and assigns, whether so expressed or not. SECTION 109. Separability Clause. ------------------- In case any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 110. Benefits of Indenture. --------------------- Nothing in this Indenture or in the Securities, express or implied, shall give to any Person, other than the parties hereto, any Paying Agent, any Securities Registrar and their successors hereunder, and the Holders, any benefit or any legal or equitable right, remedy or claim under this Indenture. SECTION 111. Governing Law. ------------- This Indenture and the Securities shall be governed by and construed in accordance with the law of the State of New York. This Indenture is subject to the provisions of the Trust Indenture Act of 1939, as amended, that are required to be part of this Indenture and shall, to the extent applicable, be governed by such provisions. SECTION 112. Legal Holidays. -------------- In any case where any Interest Payment Date, Redemption Date, sinking fund payment date or Stated Maturity or Maturity of any Security shall not be a Business Day, then (notwithstanding any other provision of this Indenture or of the Securities) payment of interest or principal (and premium, if any) need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the Interest Payment Date, Redemption Date or sinking fund payment date, or at the Stated Maturity or Maturity; provided that no interest shall accrue on such payment for the period from and after such Interest Payment Date, Redemption Date, sinking fund payment date, Stated Maturity or Maturity, as the case may be. SECTION 113. Casino Control Act. ------------------ Notwithstanding the provisions of Section 111 hereof, each of the provisions of this Indenture is subject to and shall be enforced in compliance with the provisions of the Casino Control Act, to the extent applicable, and the regulations promulgated thereunder, unless such provisions are in conflict with the TIA, in which case the TIA shall control. The Securities are to be held subject to the condition that if a holder thereof is found to be disqualified by the Casino Control Commission pursuant to the provisions of the Casino Control Act, such holder shall dispose of the Securities in accordance with the provisions of Section 1109 hereof. The Company shall have the right to repurchase the Securities at the lowest of (a) the principal amount thereof; (b) the amount which the Disqualified Holder or beneficial owner paid for the 14 Securities, together with accrued interest up to the date of the determination of disqualification; or (c) the market value of such Securities. ARTICLE TWO SECURITY FORMS SECTION 201. Forms Generally. --------------- The Securities and the Trustee's certificate of authentication shall be in substantially the forms set forth in this Article, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or as may, consistently herewith, be determined by the officers executing such Securities, as evidenced by their execution of the Securities. Any portion of the text of any Security may be set forth on the reverse thereof, with an appropriate reference thereto on the face of the Security. The definitive Securities shall be printed, lithographed or engraved on steel-engraved borders or may be produced in any other manner, all as determined by the officers of the Company executing such Securities, as evidenced by their execution of such Securities. SECTION 202. Form of Face of Notes. From and after the effective date of the merger, certificates to be issued to evidence the Security shall be as follows: GB HOLDINGS INC. From and after the effective date of the Merger, certificates to be issued to evidence the Security shall be as follows: 11% NOTE DUE 2005 No. _________________ $ __________________ GB Holdings Inc., a Delaware corporation (herein called the "Holdings," which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to _________ or registered assigns, the principal sum of __________ U.S. Dollars on September 29, 2005 at the office or agency of the Company referred to below, and to pay interest thereon on March 29, 2001 and thereafter, on September 29 and March 29 in each year, from September 29, 2000, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, at the rate of 11% per annum, until the principal hereof is paid or duly provided for. Notwithstanding anything contained herein, the rate of interest on the Securities shall not exceed the highest rate permitted by law. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the September 14 or March 14 (whether or not a Business Day), as the 15 case may be, next preceding such Interest Payment Date. Any such interest not so punctually paid or duly provided for shall forthwith cease to be payable to the Holder on such Regular Record Date, and such defaulted interest may be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities not less than 10 days prior to such Special Record Date, or may be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture. Payment of the principal of (and premium, if any, on) and interest on this Security will be made at the office or agency of the Company maintained for that purpose in The City of New York, or at such other office or agency of the Company as may be maintained for such purpose, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that payment of interest may be made at the option of the Company (a) by check mailed to the address of the Person entitled thereto as such address shall appear on the Security Register or (b) by transfer to an account maintained by the payee located in the United States. Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been duly executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture, or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal. Dated: ______________ GB HOLDINGS INC. By -------------------------------- Attest: ________________________________ Authorized Signature SECTION 203. Form of Reverse of Notes. ------------------------ This Security is one of a duly authorized issue of securities of the Company designated as its 11% Notes Due 2005 (herein called the "Securities"), limited (except as otherwise provided in the Indenture referred to below) in aggregate principal amount to $110 million, which may be issued under an indenture (herein called the "Indenture"), dated as of September 29, 2000 between the GB Property Funding Corp., GB Holdings, Inc. and Greate Bay Hotel and Casino, Inc. and Wells Fargo Bank Minnesota, National Association, trustee (herein called the "Trustee," which term includes any successor trustee under the Indenture), to which 16 Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties, obligations and immunities thereunder of the Company, the Trustee and the Holders of the Securities, and of the terms upon which the Securities are, and are to be, authenticated and delivered. Interest on the Securities shall be computed on the basis of a 360-day year of twelve 30-day months. The Securities are subject to redemption upon not less than 30 nor more than 60 days' notice, at any time after January 1, 2001, as a whole or in part, at the election of the Company, at a Redemption Price equal to 100% of the principal amount, together in the case of any such redemption with accrued, unpaid interest, if any, to the Redemption Date, all as provided in the Indenture. Each of the provisions of this Security is subject to and shall be enforced in compliance with the provisions of the Casino Control Act and the regulations promulgated thereunder, to the extent applicable. Each Holder by accepting a Security agrees that all Holders, whether initial holders or subsequent transferees, shall be subject to the qualification provisions of the Casino Control Act. As set forth more fully in the Indenture, in the event that the Casino Control Commission determines that a Holder is not qualified under the Casino Control Act, the Company shall have the absolute right and obligation to purchase from such Holder (the "Disqualified Holder") the Securities the Disqualified Holder may then possess, no later than forty-five days after the date that the Company serves notice on any Disqualified Holder of such determination. Immediately upon such determination, the Disqualified Holder shall have (a) no further right to exercise, directly or through any trustee or nominee, any right conferred by its Securities or (b) no further right to receive any dividends, interest, or other distribution or payment with respect to any such Securities. In the event a Disqualified Holder fails to so sell its Securities within 30 days after the determination by the Casino Control Commission, the Company shall purchase such Securities within 15 days after the end of such 30 day period at the lowest of (i) the principal amount thereof; (ii) the amount which the Disqualified Holder paid for the Securities, together with accrued interest up to the date of the determination of disqualification; or (c) the market value of such Securities. In the case of any redemption of Securities, interest installments whose Stated Maturity is on or prior to the Redemption Date will be payable to the Holders of such Securities, or one or more Predecessor Securities, of record at the close of business on the relevant Record Date referred to on the face hereof. Securities (or portions thereof) for whose redemption and payment provision is made in accordance with the Indenture shall cease to bear interest from and after the Redemption Date. In the event of redemption of this Security in part only, a new Security or Securities for the unredeemed portion hereof shall be issued in the name of the Holder hereof upon the cancellation hereof. If an Event of Default shall occur and be continuing, the principal of all the Securities may be declared due and payable in the manner and with the effect provided in the Indenture. The Indenture contains provisions for defeasance at any time of (a) the entire indebtedness of the Company on this Security and (b) certain restrictive covenants and the 17 related Defaults and Events of Default, upon compliance by the Company with certain conditions set forth therein, which provisions apply to this Security. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in aggregate principal amount of the Securities at the time Outstanding. The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount of the Securities at the time Outstanding, on behalf of the Holders of all the Securities, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such amendment, modification, consent or waiver by or on behalf of the Holder of this Security, or otherwise in accordance with the terms of the Indenture, shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof whether or not notation thereof is made upon this Security. No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company which is absolute and unconditional, to pay the principal of (and premium, if any, on) and interest on this Security at the times, place, and rate, and in the coin or currency, herein prescribed. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registerable on the Security Register of the Company, upon surrender of this Security for registration of transfer at the office or agency of the Company maintained for such purpose in The City of New York, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities, of authorized denominations and for the same aggregate principal amounts will be issued to the designated transferee or transferees. The Securities are issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, the Securities are exchangeable for a like aggregate principal amount of Securities of a different authorized denomination, as requested by the Holder surrendering the same. No service charge shall be made for any registration of transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Prior to the time of due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any agent shall be affected by notice to the contrary. All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture. 18 Each Guarantor (which term includes any successor Person under the Indenture) has unconditionally guaranteed, to the extent set forth in the Indenture and subject to the provisions in the Indenture, (a) the due and punctual payment of the principal of and interest on the Securities, whether at maturity, by acceleration or otherwise, the due and punctual payment of interest on overdue principal, and, to the extent permitted by law, interest, and the due and punctual performance of all other obligations of the Company to the Holders or the Trustee all in accordance with the terms set forth in the Indenture and (b) in case of any extension of time of payment or renewal of any Securities or any of such other obligations, that the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at Stated Maturity, by acceleration or otherwise. SECTION 204. Form of Trustee's Certificate of Authentication. ----------------------------------------------- The Trustee's certificate of authentication shall be in substantially the following form: TRUSTEE'S CERTIFICATE OF AUTHENTICATION. This is one of the Securities referred to in the within-mentioned Indenture. WELLS FARGO BANK, NATIONAL ASSOCIATION, AS TRUSTEE By: ------------------------------------ Authorized Officer ARTICLE THREE THE SECURITIES SECTION 301. Title and Terms. --------------- (a) The aggregate principal amount of securities which may be authenticated and delivered under this Indenture is limited to $110 million (reduced by the Exchanged Amount), except for securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other securities. (b) The Notes shall be known and designated as the "11% Notes Due 2005" of the Company. Their Stated Maturity shall be September 29, 2005, and they shall bear interest at the rate of 11% per annum from September 29, 2000, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, payable on March 29, 2001 and semiannually thereafter on September 29 and March 29 in each year and at said Stated Maturity, until the principal thereof is paid or duly provided for. (c) The principal of (and premium, if any, on) and interest on the Securities shall be payable at the office or agency of the Company maintained for such purpose in The City of New York, or at such other office or agency of the Company as may be maintained for such purpose; provided, however, that, at the option of the Company, interest may be paid by check mailed to addresses of the Persons entitled thereto as such addresses shall appear on the Security Register. 19 (d) The Securities shall be redeemable as provided in Article Eleven. (e) If the Company is served with notice of the disqualification of any Holder under Section 105(d) of the Casino Control Act by the Casino Control Commission, such Holder will be prohibited under Section 105(e) of the Casino Control Act from (i) receiving interest on the Securities held by such Holder; (ii) exercising, directly or through any trustee or nominee, any right conferred on such Securities; and (iii) receiving any remuneration in any form from any Person licensed or qualified by the Casino Control Commission (including the Company, the Guarantors and the Trustee) for services rendered or otherwise. Notwithstanding the foregoing, the Trustee shall be entitled to exercise all rights with respect to the Securities held by such Holder including, but not limited to, accelerating the Securities (any monies or securities received by the Trustee on behalf of such Holder to be held in trust for such Holder pursuant to Section 605 hereof). If the Trustee exercises voting rights with respect to such Securities, such votes shall be cast in the same proportion as the votes of the other Outstanding Securities are cast on such issue. A copy of any notice served upon the Company as described above shall be promptly delivered by the Company to the Trustee. Any such notice to the Trustee shall be effective against the Trustee on the second Business Day after receipt thereof by a Responsible Officer of the Trustee. SECTION 302. Denominations. ------------- The Securities shall be issuable only in registered form without coupons and only in denominations of $1,000 and any integral multiple thereof. SECTION 303. Execution, Authentication, Delivery and Dating. ---------------------------------------------- The Securities shall be executed on behalf of the Company by its Chairman, its President, a Vice President, or the Chief Financial Officer. The signature of any officer on the Securities may be manual or facsimile signatures of the present or any future such authorized officer and may be imprinted or otherwise reproduced on the Securities. Securities bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities. At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities, and the Trustee in accordance with such Company Order shall authenticate and deliver such Securities. Each Security shall be dated the date of its authentication. No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Security a certificate of authentication substantially in the form provided for herein duly executed by the Trustee by manual signature of an authorized officer, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder and is entitled to the benefits of this Indenture. 20 In case the Company, pursuant to Article Eight, shall be consolidated or merged with or into any other Person or shall convey, transfer, lease or otherwise dispose of its properties and assets substantially as an entirety to any Person, and the successor Person resulting from such consolidation, or surviving such merger, or into which the Company shall have been merged, or the Person which shall have received a conveyance, transfer, lease or other disposition as aforesaid shall have executed an indenture supplemental hereto with the Trustee pursuant to Article Eight, any of the Securities authenticated or delivered prior to such consolidation, merger, conveyance, transfer, lease or other disposition may, from time to time, at the request of the successor Person, be exchanged for other Securities executed in the name of the successor Person with such changes in phraseology and form as may be appropriate, but otherwise in substance of like tenor as the Securities surrendered for such exchange and of like principal amount; and the Trustee, upon Company Request of the successor Person, shall authenticate and deliver Securities as specified in such request for the purpose of such exchange. If Securities shall at any time be authenticated and delivered in any new name of a successor Person pursuant to this Section in exchange or substitution for or upon registration of transfer of any Securities, such successor Person, at the option of the Holders but without expense to them, shall provide for the exchange of all Securities at the time Outstanding for Securities authenticated and delivered in such new name. SECTION 304. Temporary Securities. -------------------- Pending the preparation of definitive Securities, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Securities which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as conclusively evidenced by their execution of such Securities. If temporary Securities are issued, the Company will cause definitive Securities to be prepared without unreasonable delay. After the preparation of definitive Securities, the temporary Securities shall be exchangeable for definitive Securities upon surrender of the temporary Securities at the office or agency of the Company designated for such purpose pursuant to Section 1002, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a like principal amount of definitive Securities of authorized denominations. Until so exchanged, the temporary Securities shall in all respects be entitled to the same benefits under this Indenture as definitive Securities. SECTION 305. Registration, Registration of Transfer and Exchange. --------------------------------------------------- The Company shall cause to be kept at the Corporate Trust Office of the Trustee a register (the register maintained in such office and in any other office or agency designated pursuant to Section 1002 being herein sometimes referred to as the "Security Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Securities and of transfers of Securities. The Security Register shall be in written form or any other form capable of being converted into written form within a reasonable time. At all reasonable times, the Security Register shall be open to inspection by the Trustee. 21 The Trustee is hereby initially appointed as security registrar (the "Security Registrar") for the purpose of registering Securities and transfers of Securities as herein provided. Upon surrender for registration of transfer of any Security at the office or agency of the Company designated pursuant to Section 1002, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities of any authorized denomination or denominations of a like aggregate principal amount and like terms. At the option of the Holder, Securities may be exchanged for other Securities of any authorized denomination and of a like aggregate principal amount and like terms, upon surrender of the Securities to be exchanged at such office or agency. Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Securities which the Holder making the exchange is entitled to receive. All Securities issued upon any registration of transfer or exchange of Securities shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such registration of transfer or exchange. Every Security presented or surrendered for registration of transfer or for exchange shall (if so required by the Company or the Security Registrar) be duly endorsed, or be accompanied by a written instrument of transfer, in form satisfactory to the Company and the Security Registrar, duly executed by the Holder thereof or his attorney duly authorized in writing. No service charge shall be made for any registration of transfer or exchange or redemption of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Securities, other than exchanges not involving any transfer. The Company shall not be required (a) to issue, register the transfer of or exchange any Security during a period beginning at the opening of business 15 days before the selection of Securities to be redeemed under Section 1104 and ending at the close of business on the day of such mailing of the relevant notice of redemption or (b) to register the transfer of or exchange any Security so selected for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part. SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities. ------------------------------------------------ If (a) any mutilated Security is surrendered to the Trustee or (b) the Company and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Security, and there is delivered to the Company and the Trustee such security or indemnity as may be required by them to save each of them harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute and upon Company Order the Trustee shall authenticate and deliver, in exchange for any such mutilated Security or in lieu of any such destroyed, lost or stolen Security, a new Security of like tenor and principal amount, bearing a number not contemporaneously outstanding. 22 In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security. Upon the issuance of any new Security under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. Every new Security issued pursuant to this Section in lieu of any destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all benefits of this Indenture equally and proportionately with any and all other Securities duly issued hereunder. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities. SECTION 307. Payment of Interest; Interest Rights Preserved. ---------------------------------------------- Interest on any Security which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name such Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest at the office or agency of the Company maintained for such purpose pursuant to Section 1002; provided, however, that each installment of interest may at the Company's option be paid by (a) mailing a check for such interest, payable to or upon the written order of the Person entitled thereto pursuant to Section 308, to the address of such Person as it appears in the Security Register or (b) transfer to an account maintained by the payee located in the United States. Any interest on any Security which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date shall forthwith cease to be payable to the Holder on the Regular Record Date by virtue of having been such Holder, and such defaulted interest ("Defaulted Interest") may be paid by the Company, at its election in each case, as provided in clause (i) or (ii) below: (i) the Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this clause provided. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest 23 which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date, and in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be given in the manner provided for in Section 106, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so given, such Defaulted Interest shall be paid to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following clause (ii); or (ii) the Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such manner of payment shall be deemed practicable by the Trustee. Subject to the foregoing provisions of this Section, each Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security. SECTION 308. Persons Deemed Owners. --------------------- Prior to the due presentment of a Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name such Security is registered as the owner of such Security for the purpose of receiving payment of principal of (and premium, if any, on) and (subject to Sections 305 and 307) interest on such Security and for all other purposes whatsoever, whether or not such Security be overdue, and none of the Company, the Trustee or any agent of the Company or the Trustee shall be affected by notice to the contrary. SECTION 309. Cancellation. ------------ All Securities surrendered for payment, redemption, registration of transfer or exchange shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee and shall be promptly cancelled by it. The Company may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and may deliver to the Trustee (or to any other Person for delivery to the Trustee) for cancellation any Securities previously authenticated hereunder which the Company has not issued and sold, and all Securities so delivered shall be promptly cancelled by the Trustee. If the Company shall so acquire any of the Securities, however, such acquisition shall not operate as a redemption or satisfaction of the indebtedness represented by such Securities unless and until the same are surrendered to the Trustee for cancellation. No Securities shall be authenticated in lieu of or in exchange for any Securities cancelled as provided in this Section, except as expressly permitted by this Indenture. All 24 cancelled Securities held by the Trustee shall be disposed of by the Trustee in accordance with its customary procedures and certification of their disposal delivered to the Company. SECTION 310. Computation of Interest. ----------------------- Interest on the Securities shall be computed on the basis of a 360-day year of twelve 30-day months. SECTION 311. Maximum Interest Rate. --------------------- Regardless of any provision contained herein or in the Securities, the Holders shall not be entitled to receive, collect or apply as interest (whether termed interest in the documents or deemed to be interest by judicial determination or operation of law) on the Securities, any amount in excess of the maximum amount allowed by applicable law, and, if any Holder ever receives, collects or applies as interest any such excess, the amount that would be excessive interest shall be deemed to be a partial prepayment of principal and treated hereunder as such; and, if the principal amount of the Securities is paid in full, any remaining excess shall forthwith be paid to the Company. In determining whether or not the interest paid or payable under any specific contingency exceeds the maximum amount of interest allowed by applicable law, the Company and the Holders shall, to the maximum extent permitted under applicable law, (a) characterize any nonprincipal payment as an expense fee, or premium rather than interest; (b) exclude voluntary prepayments and the effects thereof; and (c) amortize, prorate, allocate and spread, in equal parts, the total amount of interest throughout the entire contemplated term of the Securities. ARTICLE FOUR SATISFACTION AND DISCHARGE SECTION 401. Satisfaction and Discharge of Indenture. --------------------------------------- This Indenture shall upon Company Request cease to be of further effect (except as to surviving rights of registration of transfer or exchange of Securities herein expressly provided for) and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture when: (i) either (A) all Securities theretofore authenticated and delivered (other than (1) Securities which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 306 and (2) Securities for whose payment money has theretofore been deposited in trust with the Trustee or any Paying Agent or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 1003) have been delivered to the Trustee for cancellation; or (B) all such Securities not theretofore delivered to the Trustee for cancellation 25 (1) have become due and payable, or (2) will become due and payable at their Stated Maturity within one year, or (3) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company, and the Company, in the case of (1), (2) or (3) above, has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust for the purpose an amount sufficient to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for principal (and premium, if any) and interest to the date of such deposit (in the case of Securities which have become due and payable) or to the Stated Maturity or Redemption Date, as the case may be; (ii) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and (iii) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for in this Section 401 relating to the satisfaction and discharge of this Indenture have been complied with. Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 606 and, if money shall have been deposited with the Trustee pursuant to subclause (b) of clause (1) of this Section, the obligations of the Trustee under Section 402 and the last paragraph of Section 1003, shall survive. SECTION 402. Application of Trust Money. -------------------------- Subject to the provisions of the last paragraph of Section 1003, all money and property deposited with the Trustee pursuant to Section 401 shall be held in trust and, at the direction of the Company, be invested prior to Maturity in United States Government Obligations, and applied by it, in accordance with the provisions of the Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium, if any) and interest for whose payment such money has been deposited with the Trustee; but such money need not be segregated from other funds except to the extent required by law. Any funds remaining following payment of all Securities and all other obligations of the Company hereunder shall be the property of the Company. ARTICLE FIVE REMEDIES SECTION 501. Events of Default. ----------------- 26 "Event of Default," wherever used herein, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (i) default in the payment of any interest on any Security when it becomes due and payable, and continuance of such default for a period of 30 days; or (ii) default in the payment of any principal of (or premium, if any, on) any Security at its Maturity; or (iii) default in the performance, or breach, of any covenant or warranty of the Company in this Indenture (other than a default in the performance, or breach, of a covenant or warranty which is specifically dealt with elsewhere in this Section), and continuance of such default or breach for a period of 60 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of a majority in principal amount of the Outstanding Securities, a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder, unless the Company, is proceeding, and continues to proceed, diligently to cure any such default; or (iv) [intentionally omitted]; or (v) [intentionally omitted]; or (vi) [intentionally omitted]; or (vii) the entry of a decree or order by a court having jurisdiction in the premises adjudging the Company a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition or in respect of the Company under the Federal Bankruptcy Code or any other applicable federal or state law, or appointing a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Company or of any substantial part of its property, or ordering the winding up or liquidation of their respective affairs, and the continuance of any such decree or order unstayed and in effect for a period of 90 consecutive days; or (viii) the institution by the Company of proceedings to be adjudicated a bankrupt or insolvent, or the consent by it to the institution of bankruptcy or insolvency proceedings against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under the Federal Bankruptcy Code or any other applicable federal or state law or the consent by it to the filing of any such petition or to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Company or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due; or (ix) [intentionally omitted]; or (x) [intentionally omitted]; or (xi) [intentionally omitted]. 27 SECTION 502. Acceleration of Maturity; Rescission and Annulment. -------------------------------------------------- If an Event of Default (other than an Event of Default specified in Section 501(vii) or 501(viii)) occurs and is continuing, then and in every such case, the Trustee and the Holders of not less than a majority in principal amount of the Securities Outstanding may declare the principal amount of all the Securities to be due and payable immediately, by a notice in writing to the Company, and upon any such declaration such principal amount shall become immediately due and payable. If an Event of Default specified in Section 501(vii) or 501(viii) occurs and is continuing, then the principal amount of all the Securities shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee and any Holder. At any time after a declaration of acceleration has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article provided, the Holders of a majority in principal amount of the Securities Outstanding, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if (i) the Company has paid or deposited with the Trustee a sum sufficient to pay, (A) all Defaulted Interest on all Outstanding Securities, (B) all unpaid principal of (and premium, if any, on) any Outstanding Securities which has become due otherwise than by such declaration of acceleration, and interest on such unpaid principal at the rate borne by the Securities; and (C) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel; and (ii) all Events of Default, other than the non-payment of amounts of principal of (or premium, if any, on) or interest on Securities which have become due solely by such declaration of acceleration, have been cured or waived as provided in Section 513. No such rescission shall affect any subsequent default or impair any right consequent thereon. SECTION 503. Collection of Indebtedness and Suits for Enforcement ---------------------------------------------------- by Trustee. - ----------- The Company covenants that if (i) default is made in the payment of any installment of interest on any Security when such interest becomes due and payable and such default continues for a period of 30 days, or (ii) default is made in the payment of the principal of (or premium, if any, on) any Security at the Maturity thereof, the Company will, upon demand of the Trustee, pay to the Trustee for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities for principal (and premium, if any) and interest, and interest on any overdue principal (and premium, if any), and, 28 in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Company or any other obligor upon the Securities and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon the Securities, wherever situated. If an Event of Default occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in any Security Document or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. SECTION 504. Trustee May File Proofs of Claim. -------------------------------- In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company, or the property of the Company, the Trustee (irrespective of whether the principal of the Securities shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of overdue principal, premium, if any, or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise, (i) to file and prove a claim for the whole amount of principal (and premium, if any) and interest owing and unpaid in respect of the Securities and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and of the Holders allowed in such judicial proceeding; and (ii) to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 606. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. 29 SECTION 505. Trustee May Enforce Claims Without Possession of ------------------------------------------------ Securities. - ----------- All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name and as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the holders of the Securities in respect of which such judgment has been recovered. SECTION 506. Application of Money Collected. ------------------------------ Any money and property collected by the Trustee pursuant to this Article or in connection with the exercise of remedies under any Security Document shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal (or premium, if any) or interest, upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: FIRST: To the payment of all amounts due the Trustee under Section 606; SECOND: To the payment of the amounts then due and unpaid for principal of (and premium, if any, on,) and interest on the Securities in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Securities for principal (and premium, if any) and interest, respectively; and THIRD: The balance, if any, to the Person or Persons entitled thereto. SECTION 507. Limitation on Suits. ------------------- No Holder of any Securities shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless: (i) the Holders of a majority in principal amount of the Outstanding Securities shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder; (ii) such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; (iii) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and (iv) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority or more in principal amount of the Outstanding Securities; it being understood and intended that no one or more Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Section 507 to affect, disturb or 30 prejudice the rights of any other Holders, or to obtain or to seek to obtain priority or preference over any other Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all the Holders. SECTION 508. Unconditional Right of Holders to Receive Principal, ---------------------------------------------------- Premium and Interest. - --------------------- Notwithstanding any other provision in this Indenture, the Holder of any of the Securities shall have the right, which is absolute and unconditional, to receive payment, as provided herein (including, if applicable, Article Thirteen) and in the terms of each note representing such Securities of the principal of (and premium, if any, on) and (subject to Section 307) interest on, such Securities on the respective Stated Maturities expressed in such Securities (or, in the case of redemption, on the Redemption Date) and to institute suit for the enforcement of any such payment, and such rights shall not be impaired without the consent of such Holder. SECTION 509. Restoration of Rights and Remedies. ---------------------------------- If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture or any Security Document and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Company, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted. SECTION 510. Rights and Remedies Cumulative. ------------------------------ Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities in the last paragraph of Section 306, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. SECTION 511. Delay or Omission Not Waiver. ---------------------------- No delay or omission of the Trustee or of any Holder of any Security to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or any Security Document or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be. SECTION 512. Control by Holders. ------------------ Notwithstanding anything to the contrary set forth in Section 316(a) of the TIA (the provisions of which are hereby excluded), the Holders of not less than a majority in principal amount of the Outstanding Securities shall have the right to direct the time, method and place of 31 conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee under this Indenture, provided that (i) such direction shall not be in conflict with any rule of law or with this Indenture; (ii) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction; and (iii) the Trustee need not take any action which might involve it in personal liability unless it has obtained appropriate indemnity. SECTION 513. Waiver of Defaults and Compliance. --------------------------------- Notwithstanding anything to the contrary set forth in Section 316(a) of the TIA (the provisions of which are hereby excluded) the Holders of not less than a majority in principal amount of the Outstanding Securities may on behalf of the Holders of all the Securities: (i) waive any past default hereunder and its consequences, except a default in respect of the payment of the principal of (or premium, if any, on) or interest on any Security, and upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured and released, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon; and (ii) waive future compliance with any term, provision or condition of this Indenture or any related instruments, agreements or documents (but no such waiver shall extend to or affect such term, provision or condition except to the extent so expressly waived), in which event the Company may omit to comply with any such term, provision or condition of this Indenture or any related instrument, agreement or document. ARTICLE SIX THE TRUSTEE SECTION 601. Notice of Defaults. ------------------ Within 90 days after the occurrence of any Default hereunder, the Trustee shall transmit in the manner and to the extent provided in TIA Section 313(c), notice of such Default hereunder known to the Trustee, unless such Default shall have been cured or waived; provided, however, that, except in the case of a Default in the payment of the principal of (or premium, if any, on) or interest on any Security, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Trustee in good faith determines that the withholding of such notice is in the interest of the Holders. The Trustee shall not be deemed to have knowledge of any Default or Event of Default hereunder unless a Responsible Officer in its Corporate Trust Department shall have actual knowledge thereof. SECTION 602. Certain Rights of Trustee. ------------------------- 32 Subject to the provisions of TIA Sections 315(a) through 315(d): (i) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (ii) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution; (iii) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate; (iv) the Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (v) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (vi) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney; (vii) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; and (viii) the Trustee shall not be liable for any action taken, suffered or omitted by it in good faith and believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture. The Trustee shall not be required to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. 33 The Trustee and its directors, officers, employees and Affiliates shall cooperate with the Casino Control Commission and the Division of Gaming Enforcement and provide such information and documentation as may from time to time be requested by such agencies. The Trustee may rely on, and shall be protected with respect to any action taken or omitted to be taken in good faith in accordance with, the direction of the Holders of not less than a majority in principal amount of Outstanding Securities. SECTION 603. Trustee Not Responsible for Recitals or Issuance of --------------------------------------------------- Securities. - ----------- The recitals contained herein and in the Securities, except for the Trustee's certificates of authentication, shall be taken as the statements of the Company, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities, except that the Trustee represents that it is duly authorized to execute and deliver this Indenture, authenticate the Securities and perform its obligations hereunder and that the statements made by it in a Statement of Eligibility and Qualification of Form T-1 supplied to the Company are true and accurate, subject to the qualifications set forth therein. The Trustee shall not be accountable for the use or application by the Company of Securities or the proceeds thereof. SECTION 604. May Hold Securities. ------------------- The Trustee, any Paying Agent, any Security Registrar or any other agent of the Company or of the Trustee, in its individual or any other capacity, may become the owner or pledgee of Securities and, subject to TIA Sections 310(b) and 311, may otherwise deal with the Company with the same rights it would have if it were not Trustee, Paying Agent, Security Registrar or such other agent. SECTION 605. Money Held in Trust. ------------------- Except as otherwise provided herein, money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise provided herein or agreed with the Company. SECTION 606. Compensation and Reimbursement. ------------------------------ The Company agrees: (i) to pay to the Trustee from time to time such compensation as the Company and the Trustee shall from time to time agree for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); and (ii) except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or bad faith; and 34 (iii) to indemnify the Trustee for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of this trust, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder or thereunder. The obligations of the Company under this Section to compensate the Trustee, to pay or reimburse the Trustee for expenses, disbursements and advances and to indemnify and hold harmless the Trustee shall constitute additional indebtedness hereunder and shall survive the satisfaction and discharge of this Indenture. As security for the performance of such obligations of the Company, the Trustee shall have a claim prior to the Securities upon all property and funds held or collected by the Trustee as such, except funds held in trust for the payment of principal of (and premium, if any, on) or interest on particular Securities. SECTION 607. Corporate Trustee Required: Eligibility. --------------------------------------- There shall at all times be a Trustee hereunder which shall be eligible to act as Trustee under TIA Section 310(a) and shall have a combined capital and surplus of at least $50,000,000. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of federal, state, territorial or District of Columbia supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. SECTION 608. Resignation and Removal; Appointment of Successor. ------------------------------------------------- (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section 609. (b) Subject to the provisions of the Casino Control Act, the Trustee may resign at any time by giving written notice thereof to the Company, the Casino Control Commission and the Division of Gaming Enforcement. If the instrument of acceptance by a successor Trustee required by Section 609 shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee. (c) Subject to the provisions of the Casino Control Act, the Trustee may be removed at any time by Act of the Holders of not less than a majority in principal amount of the Outstanding Securities, delivered to the Trustee and to the Company. (d) If at any time: (i) the Trustee shall fail to comply with the provisions of TIA Section 310(b) after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Security for at least six months; or 35 (ii) the Trustee shall cease to be eligible under Section 607 and shall fail to resign after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Security for at least six months; or (iii) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, subject to the provisions of the Casino Control Act, (A) the Company, by a Board Resolution, may remove the Trustee or (B) subject to TIA Section 315(e), any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. (e) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, the Company, by a Board Resolution, shall promptly appoint a successor Trustee. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee shall be appointed by Act of the Holders of a majority in principal amount of the Outstanding Securities delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment, become the successor Trustee and supersede the successor Trustee appointed by the Company. If no successor Trustee shall have been so appointed by the Company or the Holders and accepted appointment in the manner hereinafter provided, any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee. Notwithstanding the foregoing, any successor Trustee may be appointed only with the prior, express approval of the Casino Control Commission, in consultation with the Division of Gaming Enforcement, provided that such successor Trustee must first be qualified as a financial source by and cooperate with the Casino Control Commission and the Division of Gaming Enforcement. (f) The Company shall give notice of each resignation and each removal of the Trustee and each appointment of a successor Trustee to the Holders of Securities in the manner provided for in Section 106. Each notice shall include the name of the successor Trustee and the address of its Corporate Trust Office. SECTION 609. Acceptance of Appointment by Successor. -------------------------------------- Every successor Trustee appointed hereunder shall take all necessary steps to be approved by the Casino Control Commission and shall execute, acknowledge and deliver to the Company, and to the retiring Trustee an instrument accepting such appointment, and the successor Trustee and the Company shall enter into a supplemental indenture evidencing the appointment of the successor Trustee. Thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and 36 deliver to such successor Trustee all property and money held by such retiring Trustee hereunder. Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts. No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article. SECTION 610. Merger, Conversion, Consolidation or Succession to -------------------------------------------------- Business. - --------- Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such Securities; and in case at that time any of the Securities shall not have been authenticated, any successor Trustee may authenticate such Securities either in the name of any predecessor hereunder or in the name of the successor Trustee; and in all such cases such certificates shall have the full force which it is anywhere in the Securities or in this Indenture provided that the certificate of authentication of any predecessor Trustee or to authenticate Securities in the name of any predecessor Trustee shall apply only to its successor or successors by merger, conversion or consolidation. ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE, COMPANY AND GUARANTORS SECTION 701. Disclosure of Names and Addresses of Holders. -------------------------------------------- Every Holder of Securities, by receiving and holding the same, agrees with the Company and the Trustee that none of the Company or the Trustee or any agent of either of them shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the Holders in accordance with TIA Section 312, regardless of the source from which such information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under TIA Section 312(b). SECTION 702. Reports by Trustee. ------------------ (a) Within 60 days after May 15 of each year commencing with the first May 15 after the first issuance of Securities, the Trustee shall transmit to the Holders, in the manner and to the extent provided in TIA Section 313(c), a brief report, dated as of such May 15 if required by TIA Section 313(a). The Trustee shall transmit to the Holders, within the times hereinafter specified a brief report with respect to the following: 37 (i) [intentionally omitted]; and (ii) the character and amount of any advances made by it as such since the date of the last report transmitted pursuant to the provisions of TIA Section 313(a) (or if no such report has yet been so transmitted, since the date of execution of the Indenture), for the reimbursement of which it claims or may claim a Lien or charge, prior to that of the Indenture Securities, on the trust estate or on property or funds held or collected by it as such Trustee, and which it has not previously reported pursuant to this clause (2), if such advances remaining unpaid at any time aggregate more than 10 per centum of the aggregate principal amount of the Securities Outstanding at such time, such report to be so transmitted within 90 days after such time. To the extent required by applicable laws, rules and regulations, a copy of each such report shall, at the time of such transmission to the Holders, be filed with each stock exchange, if any, upon which the Securities are listed, and also with the Commission. (b) The Trustee shall transmit by mail to the Casino Control Commission and the Division of Gaming Enforcement (i) an initial list of the beneficial Holders of the Securities promptly after the issuance of the Securities; (ii) current lists of the Holders appearing in the Security Register on a twice-per-year basis, no later than March 1 and September 1 of each year; and (iii) upon request by the Casino Control Commission or the Division of Gaming Enforcement, such additional information with respect to the beneficial Holders of the Securities as the Trustee may obtain through its good faith efforts. (c) The Trustee shall notify the Casino Control Commission and the Division of Gaming Enforcement, simultaneously with any notice given to the Holders, of any default or acceleration under the Securities, this Indenture or any other documents, instrument, agreement, covenant, or condition related to the issuance of the Securities, whether declared or effectuated by the Trustee or the Holders. The Trustee shall notify the Casino Control Commission and the Division of Gaming Enforcement on a continuing basis and in writing, of any actions taken by the Trustee or the Holders with regard to such default, acceleration or similar matters related thereto. (d) The Trustee shall notify the Casino Control Commission and the Division of Gaming Enforcement of the removal or resignation of the Trustee promptly after such removal or resignation. (e) The Trustee shall provide to the Casino Control Commission and the Division of Gaming Enforcement, promptly after the execution by the Trustee of the same, copies of any and all amendments or modifications to this Indenture, the Securities or any other documents, instrument, agreement, covenant or condition related to the issuance of the Securities. SECTION 703. Reports by Company. ------------------ The Company shall, to the extent required by the TIA: (i) file with the Trustee, within 15 days after the Company is required to file the same with the Commission, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations 38 prescribe) which the Company may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934; or, if the Company is not required to file information, documents or reports pursuant to either of said Sections, then it may, if it determines to do so, file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such of the supplementary and periodic information, documents and reports which may be required pursuant to Section 13 of the Securities Exchange Act of 1934 in respect of a security listed and registered on a national securities exchange as may be prescribed from time to time in such rules and regulations; (ii) file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such additional information, documents and reports with respect to compliance by the Company with the conditions and covenants of this Indenture as may be required from time to time by such rules and regulations; (iii) transmit by mail to all Holders, in the manner and to the extent provided in TIA Section 313(c), within 30 days after the filing thereof with the Trustee, such summaries of any information, documents and reports required to be filed by the Company, as the case may be, pursuant to paragraphs (i) and (ii) of this Section as may be required by rules and regulations prescribed from time to time by the Commission; and (iv) comply in all material respects with all requirements and provisions of the Casino Control Act and notify the Trustee by mail of all formal hearings and formal proceedings materially relating to the Company before the Casino Control Commission relating to the plenary casino licenses for the Company, as the same are scheduled. Such notice shall be in writing and given at least seven days prior to the hearing to which such notice relates, unless a shorter notice is given to the Company in which event the Company shall notify the Trustee promptly upon receiving such definite information as shall be contained in such notice. The Company hereby agrees that the Trustee may, but shall have no obligation to, attend such hearings and other proceedings if permitted to do so by the Casino Control Commission. ARTICLE EIGHT CONSOLIDATION AND MERGER SECTION 801. Company May Merge and Consolidate. --------------------------------- The Company shall not consolidate with or merge with or into any Person or group of Persons in a single transaction or through a series of transactions, except that: (i) The Company may consolidate with or merge with or into any Person or group of Persons in a single transaction or through a series of transactions if (A) the Company shall be the continuing Person, or the resulting or surviving Person (the "surviving entity") shall be a Person organized and existing under the laws of the United States or any State thereof or the District of Columbia; (B) the surviving entity (other the Company) shall expressly assume, by a supplemental indenture executed 39 and delivered to the Trustee, in form and substance reasonably satisfactory to the Trustee, all of the obligations of the Company under the Securities, and this Indenture; and (C) immediately before and immediately after giving effect to such transaction, or series of transactions (including, without limitation, any Indebtedness incurred or anticipated to be incurred in connection with or in respect of, such transaction or series of transactions), no Default or Event of Default shall have occurred and be continuing; (ii) [intentionally omitted]; and (iii) the Company or such Person shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation or merger and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture, comply with this covenant and that all conditions precedent herein provided for relating to such transaction have been complied with. SECTION 802. Successor Substituted. --------------------- Upon any consolidation of the Company with or merger of the Company with or into any other Person in accordance with Section 801, the successor Person formed by such consolidation or merger shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein. ARTICLE NINE SUPPLEMENTAL INDENTURES SECTION 901. Supplemental Indentures and Amendments Without Consent ------------------------------------------------------ of Holders. - ----------- Without the consent of any Holders, the Company, when it is so authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the Trustee, for any of the following purposes: (i) to evidence the succession of another Person to the Company and the assumption by any such successor of the covenants of the Company, contained herein and in the Securities; or (ii) to add to the covenants of the Company for the benefit of the Holders or to surrender any right or power herein conferred upon the Company; or (iii) to add any additional Events of Default; or (iv) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee pursuant to the requirements of Section 609; or (v) to cure any ambiguity, to correct or supplement any provision herein which may be inconsistent with any other provision herein, or to make any other 40 provisions with respect to matters or questions arising under this Indenture; provided that such action shall not adversely affect the interests of the Holders in any material respect; or (vi) [intentionally omitted]; or (vii) to add any guarantor; or (viii) to make any other change that does not adversely affect the rights of any Holder; or (ix) to secure the Securities. SECTION 902. Supplemental Indentures and Amendments with Consent --------------------------------------------------- of Holders. - ----------- Upon the request of the Company, by a Board Resolution authorizing the execution thereof, together with the consent of the Holders of not less than a majority in principal amount of the Outstanding Securities, by Act of said Holders delivered to the Trustee, the Trustee shall join the Company in an indenture or indentures supplemental hereto, for any purpose, including, without limitation, for the purpose of adding any provisions to or changing, modifying or amending in any manner or eliminating any of the provisions of this Indenture or making additions to, changing, modifying, amending or eliminating in any manner the rights of the Holders hereunder; provided, however, that no such supplemental indenture, or addition, change, amendment or modification to, or elimination of any provision of, shall, without the consent of the Holder of each Outstanding Security affected thereby: (i) change the Stated Maturity of the principal of, or any installment of interest on, any Security, or reduce the principal amount thereof or the rate of interest thereon or any premium payable upon the redemption thereof, or change the coin or currency in which any Security or any premium or the interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date); or (ii) reduce the percentage in principal amount of the Outstanding Securities, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences provided for in this Indenture; or (iii) modify any of the provisions of this Section or Section 513, except to increase any such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Outstanding Security affected thereby. It shall not be necessary for any Act of Holders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof. SECTION 903. Execution of Supplemental Indentures and Amendments. --------------------------------------------------- 41 In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture and all conditions precedent herein provided for relating to such supplemental indenture have been complied with. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture which affects the Trustee's own rights, duties, or immunities under this Indenture or otherwise. SECTION 904. Effect of Supplemental Indentures. --------------------------------- Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. SECTION 905. Conformity with Trust Indenture Act. ----------------------------------- Every supplemental indenture executed pursuant to the Article shall conform to the requirements of the Trust Indenture Act. SECTION 906. Reference in Securities to Supplemental Indentures. -------------------------------------------------- Securities authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities so modified as to conform, in the opinion of the Trustee and the Company, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Securities. SECTION 907. Notice of Supplemental Indentures and Amendments. ------------------------------------------------ Promptly after the execution by the Company and the Trustee of any supplemental indenture or amendment pursuant to the provisions of Section 902, the Company shall give notice thereof to the Holders of each Outstanding Security affected, in the manner provided for in Section 106, setting forth in general terms the substance of such supplemental indenture or amendment. ARTICLE TEN COVENANTS SECTION 1001. Payment of Principal, Premium, if any, and Interest. --------------------------------------------------- The Company covenants and agrees for the benefit of the Holders that it will duly and punctually pay the principal of (and premium, if any, on) and interest on the Securities in accordance with the terms of the Securities and this Indenture. SECTION 1002. Maintenance of Office or Agency. ------------------------------- 42 The Company will maintain in The City of New York an office or agency where Securities may be presented or surrendered for payment, where Securities may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Securities and this Indenture may be served. The Corporate Trust Office of the Trustee shall be such office or agency of the Company, unless the Company shall designate and maintain some other office or agency for one or more of such purposes. The Company will give prompt written notice to the Trustee of any change in the location of any such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands. The Company may also from time to time designate one or more other offices or agencies (in or outside of The City of New York) where the Securities may be presented or surrendered for any or all such purposes and may from time to time rescind any such designation; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in The City of New York for such purposes. The Company will give prompt written notice to the Trustee of any such designation or rescission and any change in the location of any such other office or agency. SECTION 1003. Money for Security Payments to Be Held in Trust. ----------------------------------------------- If the Company shall at any time act as its own Paying Agent, it will, on or before each due date of the principal of (and premium, if any, on) or interest on any of the Securities, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal (and premium, if any) or interest so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided and will promptly notify the Trustee of its action or failure so to act. Whenever the Company shall have one or more Paying Agents for the Securities, it will, on or before each due date of the principal of (and premium, if any, on), or interest on, any Securities, deposit with a Paying Agent a sum sufficient to pay the principal (and premium, if any) or interest so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such principal, premium or interest, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of such action or any failure so to act. The Company will cause each Paying Agent (other than the Trustee) to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will: (i) hold all sums held by it for the payment of the principal of (and premium, if any on) or interest on Securities in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided; (ii) give the Trustee notice of any default by the Company (or any other obligor upon the Securities) in the making of any payment of principal (and premium, if any) or interest; and 43 (iii) at any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent. The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such sums. Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of (and premium, if any, on) or interest on any Security and remaining unclaimed for two years after such principal (and premium, if any) or interest has become due and payable shall be paid to the Company on Company Request, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in the Borough of Manhattan, The City of New York, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Company. SECTION 1004. Corporate Existence. ------------------- Subject to Article Eight, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect the corporate existence, rights (charter and statutory) and franchises of the Company; provided, however, that the Company shall not be required to preserve any such right or franchise if the Board of Directors of the Company shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and that the loss thereof is not disadvantageous in any material respect to the Company. SECTION 1005. Payment of Taxes and Other Claims. --------------------------------- The Company will pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (a) all taxes, assessments and governmental charges levied or imposed upon the Company or upon the income, profits or property of the Company and (b) all lawful claims for labor, materials and supplies, which, if unpaid, might by law become a lien upon the property of the Company; provided, however, that the Company shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings. SECTION 1006. Maintenance of Properties. ------------------------- Subject to and as permitted by the terms of this Indenture the Company will cause all properties owned by the Company or used or held for use in the conduct of its business to be maintained and kept in good condition, repair and working order and supplied with all necessary 44 equipment and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof as in the judgment of the Company may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided, however, that nothing in this Section shall prevent the Company from discontinuing the maintenance of any of such properties if such discontinuance is, in the judgment of the Company, desirable in the conduct of its business and not disadvantageous in any material respect to the Holders. SECTION 1007. [Intentionally Omitted.] SECTION 1008. Statement by Officer as to Compliance. ------------------------------------- The Company will deliver to the Trustee, within 120 days after the end of each fiscal year, a brief certificate, which may be in the form attached as Exhibit A, from the principal executive officer, principal financial officer or principal accounting officer as to his or her knowledge of the Company's compliance with all conditions and covenants under this Indenture. For purposes of this Section 1008, such compliance shall be determined without regard to any period of grace or requirement of notice under this Indenture. SECTION 1009. Statement by Officers of Certain Defaults. ----------------------------------------- When any Default has occurred and is continuing under this Indenture, or if the trustee for or the holder of any other evidence of Indebtedness of the Company gives any notice or takes any other action with respect to a claimed default (other than with respect to Indebtedness in the principal amount of less than $5 million), the Company shall deliver to the Trustee by registered or certified mail or by telegram, telex or facsimile transmission an Officers' Certificate specifying such event, notice or other action within five Business Days of its occurrence. SECTION 1010. [Intentionally Omitted.] SECTION 1011. [Intentionally Omitted.] SECTION 1012. [Intentionally Omitted.] SECTION 1013. Limitation on Restricted Payments. --------------------------------- The Company shall not make any Restricted Payment if an Event of Default shall have occurred and be continuing at the time of such Restricted Payment. SECTION 1014. [Intentionally Omitted.] SECTION 1015. [Intentionally Omitted.] SECTION 1016. [Intentionally Omitted.] SECTION 1017. Limitation on Asset Sales. ------------------------- Subject to and as permitted by the terms of this Indenture the Company shall not make any Asset Sale of its properties unless (a) the consideration received in the Asset Sale is equal to Fair Market Value; (b) the proceeds therefrom consist of at least 85% cash and/or Cash Equivalents; and (c) unless otherwise expressly provided herein, the Net Cash Proceeds of such 45 Asset Sale shall be: (i) applied in the manner described in the following paragraph; or (ii) retained by the Company to apply to the payment on its Securities when due. On or before the 180th day after the date on which the Company consummates the relevant Asset Sale and subject to and as permitted by the terms of this Indenture, the Company shall use all of the Net Cash Proceeds from such Asset Sale (other than amounts that the Company has determined to retain pursuant to clause (ii) of the preceding paragraph) to make either (a) an offer to purchase (the "Asset Sale Offer") from all holders of Securities up to a maximum principal amount (expressed as a multiple of $1,000) of Securities equal to such Net Cash Proceeds at a purchase price equal to 100% of the principal amount thereof plus accrued and unpaid interest thereon, if any, to the date of purchase or (b) a Permitted Investment; provided, that the Company shall not be required to make any Asset Sale Offer if the Net Cash Proceeds of all Asset Sales that are not used to make a Permitted Investment within 180 days, do not exceed $5 million. Each Asset Sale Offer shall remain open for a period of at least 20 business days. If the Asset Sale Offer is more than fully subscribed to by the Holders of the Securities, the particular Securities to be accepted shall be selected by such method as the Trustee shall deem fair and appropriate and which may provide for the selection of portions of the principal of Securities; provided, however, that no such partial acceptance shall reduce the portion of the principal amount of a Security not redeemed to less than, $1,000; and provided further that so long as the Securities are listed on any national securities exchange (as such term is defined in the Exchange Act), such selection shall be made by the Trustee in accordance with the provisions of such exchange. SECTION 1018. [Intentionally Omitted.] SECTION 1019. [Intentionally Omitted.] SECTION 1020. [Intentionally Omitted.] SECTION 1021. [Intentionally Omitted.] SECTION 1022. [Intentionally Omitted.] SECTION 1023. [Intentionally Omitted.] SECTION 1024. [Intentionally Omitted.] SECTION 1025. [Intentionally Omitted.] SECTION 1026. [Intentionally Omitted.] SECTION 1027. [Intentionally Omitted.] ARTICLE ELEVEN REDEMPTION OF SECURITIES SECTION 1101. Optional Redemption. ------------------- The Securities may be redeemed, at the election of the Company, as a whole or from time to time in part, at the times, subject to the conditions and at the Redemption Price specified in the form of Security, together with accrued interest to the Redemption Date. 46 SECTION 1102. Applicability of Article. ------------------------ Redemption of Securities at the election of the Company or otherwise, as permitted or required by any provision of this Indenture, shall be made in accordance with such provision and this Article, other than repurchases made from time to time in the open market. SECTION 1103. Election to Redeem; Notice to Trustee. ------------------------------------- The election of the Company to redeem any Securities pursuant to Section 1101 shall be evidenced by a Board Resolution. In case of any redemption at the election of the Company, the Company shall, at least 60 days prior to the Redemption Date fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee of such Redemption Date and of the principal amount of Securities to be redeemed and shall deliver to the Trustee such documentation and records as shall enable the Trustee to select the Securities to be redeemed pursuant to Section 1104. SECTION 1104. Selection by Trustee of Securities to Be Redeemed. ------------------------------------------------- If less than all the Securities are to be redeemed, the particular Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee, from the Outstanding Securities not previously called for redemption, by such method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of portions of the principal of Securities; provided, however, that no such partial redemption shall reduce the portion of the principal amount of a Security not redeemed to less than $1,000 and, provided further that, so long as the Securities are listed on any national securities exchange (as such term is defined in the Exchange Act), any such redemption shall be made by the Trustee in accordance with the provisions of such exchange. The Trustee shall promptly notify the Company in writing of the Securities selected for redemption and, in the case of any Securities selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to redemption of Securities shall relate, in the case of any Security redeemed or to be redeemed only in part, to the portion of the principal amount of such Security which has been or is to be redeemed. SECTION 1105. Notice of Redemption. -------------------- Notice of redemption shall be given in the manner provided for in Section 106 not less than 30 nor more than 60 days prior to the Redemption Date, to each Holder of Securities to be redeemed; provided, however, that in the case of an optional redemption in which the Company has called for redemption all outstanding Securities in connection with a refinancing of such Securities, the Company shall be permitted to (a) specify a proposed redemption date; (b) change the proposed redemption date once to a final redemption date by notice mailed to Holders not later than five business days prior to the final redemption date; (c) establish the final redemption date as a date not more than 90 days after the first notice from the Company calling the Securities for optional redemption was mailed to Holders; and (d) rescind the redemption offer at any time prior to the final redemption date, which rescission shall not cause the maturity of the Securities to have changed. 47 All notices of redemption shall state: (i) the Redemption Date; (ii) the Redemption Price; (iii) if less than all Outstanding Securities are to be redeemed, the identification (and, in the case of a partial redemption, the principal amounts) of the particular Securities to be redeemed; (iv) that on the Redemption Date the Redemption Price (together with accrued interest, if any, to the Redemption Date payable as provided in Section 1107) will become due and payable upon each such Security, or the portion thereof, to be redeemed, and that interest thereon will cease to accrue on and after said date; and (v) the place or places where such Securities are to be surrendered for payment of the Redemption Price. Notice of redemption of Securities to be redeemed at the election of the Company shall be given by the Company or, at the Company's request, by the Trustee in the name and at the expense of the Company. SECTION 1106. Deposit of Redemption Price. --------------------------- Prior to any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 1003) in immediately available funds an amount of money sufficient to pay the Redemption Price of, and accrued interest on, all the Securities which are to be redeemed on that date. SECTION 1107. Securities Payable on Redemption Date. ------------------------------------- Notice of redemption having been given as aforesaid, the Securities so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified (together with accrued interest, if any, to the Redemption Date), and from and after such date (unless the Company shall default in the payment of the Redemption Price and accrued interest) such Securities shall cease to bear interest. Upon surrender of any such Security for redemption in accordance with said notice, such Security shall be paid by the Company at the Redemption Price, together with accrued interest, if any, to the Redemption Date; provided, however, that installments of interest whose Stated Maturity is on or prior to the Redemption Date shall be payable to the Holders of such Securities, or one or more Predecessor Securities, registered as such at the close of business on the relevant Record Dates according to their terms and the provisions of Section 307. If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal (and premium, if any) shall, until paid, bear interest from the Redemption Date at the rate borne by the Securities. SECTION 1108. Securities Redeemed in Part. --------------------------- Any Security which is to be redeemed only in part shall be surrendered at the office or agency of the Company maintained for such purpose pursuant to Section 1002 (with, if the 48 Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or such Holder's attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and deliver to the Holder of such Security without service charge, a new Security or Securities, of any authorized denomination as requested by such Holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Security so surrendered. SECTION 1109. Redemption Pursuant to Gaming Laws. ---------------------------------- (a) If required to qualify by the Casino Control Commission, all Holders, whether initial Holders or subsequent transferees, shall be subject to the qualification provisions of the Casino Control Act relating to financial sources and/or security holders. In the event that the Casino Control Commission determines that a Holder is not qualified under the Casino Control Act and/or such Holder fails to submit for qualification as required by the Casino Control Commission in its sole discretion, the Company shall have the absolute right and obligation to purchase from such Holder (the "Disqualified Holder") the Securities the Disqualified Holder may then possess, either directly, indirectly or beneficially, no later than forty-five days after the date the Company serves notice on any Disqualified Holder of such determination. Immediately upon such determination, the Disqualified Holder shall have no further right (i) to exercise, directly or indirectly, through any trustee or nominee or any other person or entity, any right conferred by any Securities and (ii) to receive any dividends, interest, or any other distribution or payment with respect to any such Securities or any remuneration in any form from the Company or the Trustee; provided, however, that after such disqualification, interest on any such Securities shall continue to accrue for the benefit of any subsequent Holder thereof. The Company shall promptly provide to the Trustee a copy of each notice served to a Disqualified Holder. (b) Upon receipt of the notice referred to in clause (a) above, the Disqualified Holder may sell its Securities either directly to any Person then qualified or previously qualified (and not subsequently disqualified) or through a bona fide brokerage transaction, conducted at arm's-length, to a Person not an Affiliate of the Disqualified Holder. In the event the Disqualified Holder fails to so sell its Securities within thirty (30) days after the determination by the Casino Control Commission, the Company shall purchase such Securities within fifteen (15) days after the end of such thirty (30) day time period, at a time and place as designated by the Company, at the lowest of (i) the principal amount thereof; (ii) the amount which the Disqualified Holder or beneficial owner paid for the Securities, together with accrued interest up to the date of the determination of disqualification; or (iii) the market value of such Securities. The right of the Company to purchase such Security may be assigned by the Company to any Person approved by the Casino Control Commission. (c) The provisions of this Section shall be construed in accordance with the applicable provisions of the Casino Control Act. 49 ARTICLE TWELVE [INTENTIONALLY OMITTED] ARTICLE THIRTEEN DEFEASANCE AND COVENANT DEFEASANCE SECTION 1301. Company's Option to Effect Defeasance or Covenant ------------------------------------------------- Defeasance. - ----------- The Company may, at its option by Board Resolution, at any time, with respect to the Securities, elect to have either Section 1302 or Section 1303 be applied to all Outstanding Securities upon compliance with the conditions set forth below in this Article Thirteen. SECTION 1302. Defeasance and Discharge. ------------------------ Upon the Company's exercise under Section 1301 of the option applicable to this Section 1302, the Company shall be deemed to have been discharged from its obligations with respect to all Outstanding Securities on the date the conditions set forth in Section 1304 are satisfied (hereinafter, "defeasance"). For this purpose, such defeasance means that the Company shall be deemed to have paid and discharged the entire indebtedness represented by the Outstanding Securities, which shall thereafter be deemed to be "Outstanding" only for the purposes of Section 1305 and the other Sections of this Indenture referred to in (a) and (b) below, and to have satisfied all its other obligations under such Securities and this Indenture insofar as such Securities are concerned (and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging the same), except for the following, which shall survive until otherwise terminated or discharged hereunder: (a) the rights of Holders of Outstanding Securities to receive, solely from the trust fund described in Section 1304 and as more fully set forth in such Section, payments in respect of the principal of (and premium, if any, on) and interest on such Securities when such payments are due; (b) the Company's obligations with respect to such Securities under Sections 304, 305, 306, 1002 and 1003; (c) the rights, powers, trusts, duties and immunities of the Trustee hereunder; and (d) this Article Thirteen. Subject to compliance with this Article Thirteen, the Company may exercise its option under this Section 1302 notwithstanding the prior exercise of its option under Section 1303 with respect to the Securities. SECTION 1303. Covenant Defeasance. ------------------- Upon the Company's exercise under Section 1301 of the option applicable to this Section 1303, the Company shall be released from its obligations under any covenant contained in Section 801 and in Sections 1005 through 1026 with respect to the Outstanding Securities on and after the date the conditions set forth below are satisfied (hereinafter, "covenant defeasance"), and the Securities shall thereafter be deemed not to be "Outstanding" for the purposes of any direction, waiver, consent or declaration or Act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed "Outstanding" for all other purposes hereunder. For this purpose, such covenant defeasance means that, with respect to the Outstanding Securities, the Company may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such 50 covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Section 501(3) or otherwise, but, except as specified above, the remainder of this Indenture and such Securities shall be unaffected thereby. SECTION 1304. Conditions to Defeasance or Covenant Defeasance. ----------------------------------------------- The following shall be the conditions to application of either Section 1302 or Section 1303 to the Outstanding Securities: (i) The Company shall irrevocably have deposited or caused to be deposited with the Trustee (or another trustee satisfying the requirements of Section 607 who shall agree to comply with the provisions of this Article Thirteen applicable to it) as trust funds, for a period of at least 123 days prior to the date of such defeasance, in trust for the purpose of making the following payments, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of such Securities, (A) money in an amount; or (B) U.S. Government Obligations which through the scheduled payment of principal and interest in respect thereof in accordance with their terms will provide, not later than one day before the due date of any payment, money in an amount; or (C) a combination thereof, sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge, and which shall be applied by the Trustee (or other qualifying trustee) to pay and discharge, (i) the principal of (and premium, if any, on) and interest on the Outstanding Securities on the Stated Maturity (or Redemption Date, if applicable) of such principal (and premium, if any) or installment of interest and (ii) any mandatory sinking fund payments or analogous payments applicable to the Outstanding Securities on the day on which such payments are due and payable in accordance with the terms of this Indenture and of such Securities; provided that the Trustee shall have been irrevocably instructed to apply such money or the proceeds of such U.S. Government Obligations to said payments with respect to the Securities. Before such a deposit the Company may give to the Trustee, in accordance with Section 1103 hereof, a notice of its election to redeem all of the Outstanding Securities at a future date in accordance with Article Eleven hereof, which notice shall be irrevocable. Such irrevocable redemption notice, if given, shall be given effect in applying the foregoing. For this purpose, "U.S. Government Obligations" means securities that are (1) direct obligations of the United States of America for the timely payment of which its full faith and credit is, pledged or (2) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the timely payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case, are not callable or redeemable at the option of the issuer thereof, and shall also include a depository receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act of 1933, as amended), as custodian with respect to any such U.S. Government Obligation or a specific payment of principal of or interest on any such U.S. Government Obligation held by such custodian for the account of the holder of such 51 depository receipt, provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the U.S. Government Obligation or the specific payment of principal of or interest on the U.S. Government Obligation evidenced by such depository receipt. (ii) No Default or Event of Default with respect to the Securities shall have occurred and be continuing on the date of such deposit or, insofar as paragraphs (7) and (8) of Section 501 hereof are concerned, at any time during the period ending on the 123rd day after the date of such deposit (it being understood that this condition shall not be deemed satisfied until the expiration of such period). (iii) Such defeasance or covenant defeasance shall not result in a breach or violation of, or constitute a default under, this Indenture or any other material agreement or instrument to which the Company is a party or by which it is bound. (iv) In the case of an election under Section 1302, the Company shall have delivered to the Trustee an Opinion of Counsel stating that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (B) there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Outstanding Securities will not recognize income, gain or loss for federal income tax purposes as a result of such defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such defeasance had not occurred. (v) In the case of an election under Section 1303, the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that the Holders of the Outstanding Securities will not recognize income, gain or loss for federal income tax purposes as a result of such covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred. (vi) The Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for relating to either the defeasance under Section 1302 or the covenant defeasance under Section 1303 (as the case may be) have been complied with. SECTION 1305. Deposited Money and U.S. Government Obligations To Be ----------------------------------------------------- Held in Trust; Other Miscellaneous Provisions. - ---------------------------------------------- Subject to the provisions of the last paragraph of Section 1003, all money and U.S. Government Obligations (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 1305, the "Trustee") pursuant to Section 1304 in respect of the Outstanding Securities shall be held in trust and applied by the Trustee, in accordance with the provisions of such Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Holders of such Securities of all sums due and to 52 become due thereon in respect of principal (and premium, if any) and interest, but such money need not be segregated from other funds except to the extent required by law. The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the U.S. Governmental Obligations deposited pursuant to Section 1304 or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the Outstanding Securities. Anything in this Article Thirteen to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon Company Request any money or U.S. Government Obligations held by it as provided in Section 1304 which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, are in excess of the amount thereof which would then be required to be deposited to effect an equivalent defeasance or covenant defeasance, as applicable, in accordance with this Article. SECTION 1306. Reinstatement. ------------- If the Trustee or any Paying Agent is unable to apply any money in accordance with Section 1305 by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company's obligations under this Indenture and the Securities shall be revived and reinstated as though no deposit had occurred pursuant to Section 1302 or 1303, as the case may be, until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 1305; provided, however, that if the Company makes any payment of principal of (or premium, if any, on) or interest on any Security following the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Securities to receive such payment from the money held by the Trustee or Paying Agent. ARTICLE FOURTEEN [INTENTIONALLY OMITTED] ARTICLE FIFTEEN MISCELLANEOUS SECTION 1501. Counterparts. ------------ This Indenture may be signed in any number of counterparts each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same Indenture. 53 IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written. GB HOLDINGS, INC. By /s/ Douglas S. Niethold ----------------------------------------- Title: Vice President Finance, Chief Financial Officer and Principal Accounting Officer Attest: /s/ Patricia M. Wild -------------------------------------- Title: Vice President, General Counsel and Secretary WELLS FARGO BANK, NATIONAL ASSOCIATION By /s/ Jane Schweiger ----------------------------------------- Title: Vice President EXHIBIT A - -------------------------------------------------------------------------------- OFFICERS' CERTIFICATE OF GB HOLDINGS, INC. - -------------------------------------------------------------------------------- Reference is made to that certain Indenture, dated as of ____________________ (the "Indenture") among GB Holdings, Inc. (the "Company") and Wells Fargo Bank, National Association, as successor by merger to Wells Fargo Bank Minnesota, National Association, as Trustee (the "Trustee"). Except as otherwise defined herein, capitalized terms used herein shall have the meanings set forth in the Indenture. Pursuant to Section 1008 of the Indenture, the undersigned officer of the Company hereby certifies to the Trustee as follows: He is now, and at the times mentioned herein has been, the duly elected, qualified and acting officer of the Company as specified below. To his knowledge, and without regard to any period of grace or requirements of notice under the Indenture, the Company is in compliance with all conditions and covenants under the Indenture. IN WITNESS WHEREOF, I have set my hand this ____ day of __________. GB HOLDINGS, INC. BY: ------------------------------------ EX-4.6 4 file004.txt INDENTURE ================================================================================ ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC., as Issuer, ACE GAMING, LLC, as Guarantor, and WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee -------------- INDENTURE Dated as of July 22, 2004 -------------- $66,258,970 3% Notes Due July 22, 2008 ================================================================================ ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC. RECONCILIATION AND TIE BETWEEN TRUST INDENTURE ACT OF 1939 AND INDENTURE, DATED AS OF JULY 22, 2004
TIA INDENTURE SECTION SECTION - --------------------------------------------------------------------------- ---------------------------------------- 310(a)(1)................................................................... 607 (a)(2).................................................................. 607 (a)(3).................................................................. N.A. (a)(4).................................................................. N.A. (a)(5).................................................................. 607 (b)..................................................................... 604, 608 (c)..................................................................... N.A. 311......................................................................... 604 312......................................................................... 701 313......................................................................... 601, 702 314(a)...................................................................... 703, 1008 (b)..................................................................... 1401(d) (c)(1).................................................................. 102 (c)(2).................................................................. 102 (c)(3).................................................................. N.A. (d)..................................................................... 702 (e)..................................................................... 102 (f)..................................................................... N.A. 315(a)...................................................................... 602 (b)..................................................................... 601 (c)..................................................................... 602 (d)..................................................................... N.A. (e)..................................................................... N.A. 316(a)(last sentence)....................................................... 101("Outstanding") (a)(1)(A)............................................................... 512 (a)(1)(B)............................................................... 513 (a)(2).................................................................. N.A. (b)..................................................................... 508 (c)..................................................................... 104(d) 317(a)(1)................................................................... 503 (a)(2).................................................................. 504 (b)..................................................................... 1003 318(a)...................................................................... 111
- -------------- Note: This reconciliation and tie shall not, for any purpose, be deemed to be a part of the Indenture. i TABLE OF CONTENTS(1) PARTIES.................................................................................................... 1 RECITALS................................................................................................... 1 ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION Section 101. Definitions................................................................................ 1 Section 102. Compliance Certificates and Opinions....................................................... 18 Section 103. Form of Documents Delivered to Trustee..................................................... 18 Section 104. Acts of Holders............................................................................ 19 Section 105. Notices, etc., to Trustee, Company and Guarantor........................................... 20 Section 106. Notice to Holders; Waiver.................................................................. 20 Section 107. Effect of Headings and Table of Contents................................................... 21 Section 108. Successors and Assigns..................................................................... 21 Section 109. Separability Clause........................................................................ 21 Section 110. Benefits of Indenture...................................................................... 21 Section 111. Governing Law.............................................................................. 22 Section 112. Legal Holidays............................................................................. 22 Section 113. Casino Control Act......................................................................... 22 ARTICLE TWO SECURITY FORMS Section 201. Forms Generally............................................................................ 22 Section 202. Form of Face of Notes...................................................................... 22 Section 203. Form of Reverse of Notes................................................................... 24 Section 204. Form of Trustee's Certificate of Authentication............................................ 27 ARTICLE THREE THE SECURITIES Section 301. Title and Terms............................................................................ 28 Section 302. Denominations.............................................................................. 29 Section 303. Execution, Authentication, Delivery and Dating............................................. 29
- -------------- (1) This table of contents shall not, for any purpose, be deemed to be a part of this Indenture. ii Section 304. Temporary Securities....................................................................... 30 Section 305. Registration, Registration of Transfer and Exchange........................................ 30 Section 306. Mutilated, Destroyed, Lost and Stolen Securities........................................... 31 Section 307. Payment of Interest; Interest Rights Preserved............................................. 32 Section 308. Persons Deemed Owners...................................................................... 32 Section 309. Cancellation............................................................................... 32 Section 310. Computation of Interest.................................................................... 33 Section 311. Maximum Interest Rate...................................................................... 33 ARTICLE FOUR SATISFACTION AND DISCHARGE Section 401. Satisfaction and Discharge of Indenture.................................................... 33 Section 402. Application of Trust Money................................................................. 34 ARTICLE FIVE REMEDIES Section 501. Events of Default.......................................................................... 34 Section 502. Acceleration of Maturity; Rescission and Annulment......................................... 36 Section 503. Collection of Indebtedness and Suits for Enforcement by Trustee............................ 37 Section 504. Trustee May File Proofs of Claim........................................................... 38 Section 505. Trustee May Enforce Claims Without Possession of Securities................................ 39 Section 506. Application of Money Collected............................................................. 39 Section 507. Limitation on Suits........................................................................ 39 Section 508. Unconditional Right of Holders to Receive Principal Premium and Interest................... 40 Section 509. Restoration of Rights and Remedies......................................................... 40 Section 510. Rights and Remedies Cumulative............................................................. 40 Section 511. Delay or Omission Not Waiver............................................................... 40 Section 512. Control by Holders......................................................................... 41 Section 513. Waiver of Defaults and Compliance.......................................................... 41 Section 514. Security Agreements........................................................................ 41 ARTICLE SIX THE TRUSTEE Section 601. Notice of Defaults......................................................................... 42 Section 602. Certain Rights of Trustee.................................................................. 42
iii Section 603. Trustee Not Responsible for Recitals or Issuance of Securities............................. 43 Section 604. May Hold Securities........................................................................ 44 Section 605. Money Held in Trust........................................................................ 44 Section 606. Compensation and Reimbursement............................................................. 44 Section 607. Corporate Trustee Required; Eligibility.................................................... 45 Section 608. Resignation and Removal; Appointment of Successor.......................................... 45 Section 609. Acceptance of Appointment by Successor..................................................... 46 Section 610. Merger, Conversion, Consolidation or Succession to Business................................ 46 ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE, COMPANY AND GUARANTOR Section 701. Disclosure of Names and Addresses of Holders............................................... 47 Section 702. Reports by Trustee......................................................................... 47 Section 703. Reports by Company and Guarantor........................................................... 48 ARTICLE EIGHT CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE Section 801. Company and Subsidiaries May Consolidate, etc., Only on Certain Terms...................... 49 Section 802. Successor Substituted...................................................................... 50 ARTICLE NINE SUPPLEMENTAL INDENTURES Section 901. Supplemental Indentures and Amendments to Security Documents Without Consent of Holders.... 51 Section 902. Supplemental Indentures and Amendments to Security Documents with Consent of Holders....... 52 Section 903. Execution of Supplemental Indentures and Amendments to Security Documents.................. 52 Section 904. Effect of Supplemental Indentures.......................................................... 53 Section 905. Conformity with Trust Indenture Act........................................................ 53 Section 906. Reference in Securities to Supplemental Indentures......................................... 53 Section 907. Notice of Supplemental Indentures and Amendments to Security Documents..................... 53
iv ARTICLE TEN COVENANTS Section 1001. Payment of Principal, Premium, if any, and Interest........................................ 53 Section 1002. Maintenance of Office or Agency............................................................ 53 Section 1003. Money for Security Payments to Be Held in Trust............................................ 53 Section 1004. Corporate Existence........................................................................ 54 Section 1005. Payment of Taxes and Other Claims.......................................................... 55 Section 1006. Maintenance of Properties.................................................................. 55 Section 1007. Insurance.................................................................................. 56 Section 1008. Statement by Officers as to Compliance..................................................... 56 Section 1009. Statement by Officer of Certain Defaults................................................... 56 Section 1010. Assumption of Obligations upon Change of Control........................................... 57 Section 1011. Limitation on Company Indebtedness......................................................... 57 Section 1012. Limitation on Subsidiary Indebtedness and Preferred Stock.................................. 57 Section 1013. Limitation on Restricted Payments.......................................................... 58 Section 1014. Limitation on Liens........................................................................ 58 Section 1015. [Intentionally Omitted.]................................................................... 59 Section 1016. Limitation on Sale-Leaseback Transactions.................................................. 59 Section 1017. Limitation on Asset Sales.................................................................. 59 Section 1018. Application of Net Cash Proceeds in Event of Loss.......................................... 60 Section 1019. Ownership of Stock of Subsidiaries......................................................... 61 Section 1020. Limitation on Transactions with Affiliates................................................. 61 Section 1021. Change in Nature of Business............................................................... 61 Section 1022. Additional Collateral...................................................................... 61 Section 1023. CRDA Investments........................................................................... 62 Section 1024. Subsidiaries............................................................................... 62 Section 1025. Security Documents......................................................................... 62 Section 1026. Validity of Security Interest.............................................................. 62 Section 1027. Duty of Cooperation........................................................................ 63 ARTICLE ELEVEN REDEMPTION OF SECURITIES Section 1101. Redemption................................................................................. 63 Section 1102. Applicability of Article................................................................... 63 Section 1103. Election to Redeem; Notice to Trustee...................................................... 63 Section 1104. Selection by Trustee of Securities to Be Redeemed.......................................... 63
v Section 1105. Notice of Redemption....................................................................... 64 Section 1106. Deposit of Redemption Price................................................................ 65 Section 1107. Securities Payable on Redemption Date...................................................... 65 Section 1108. Securities Redeemed in Part................................................................ 65 Section 1109. Redemption Pursuant to Gaming Laws......................................................... 65 ARTICLE TWELVE GUARANTEE ARRANGEMENTS Section 1201. Guarantee.................................................................................. 66 Section 1202. Execution and Delivery of Guarantee........................................................ 68 Section 1203. Additional Guarantors...................................................................... 68 Section 1204. Termination of Guarantee................................................................... 68 ARTICLE THIRTEEN DEFEASANCE AND COVENANT DEFEASANCE Section 1301. Company's Option to Effect Defeasance or Covenant Defeasance............................... 68 Section 1302. Defeasance and Discharge................................................................... 69 Section 1303. Covenant Defeasance........................................................................ 69 Section 1304. Conditions to Defeasance or Covenant Defeasance............................................ 69 Section 1305. Deposited Money and U.S. Government Obligations To Be Held in Trust; Other Miscellaneous Provisions.............................................................................. 71 Section 1306. Reinstatement.............................................................................. 71 ARTICLE FOURTEEN SECURITY INTEREST Section 1401. Assignment of Security Interest............................................................ 72 Section 1402. Suits to Protect the Collateral............................................................ 73 Section 1403. Further Assurances and Security............................................................ 73 Section 1404. Release of Collateral...................................................................... 73 Section 1405. Release Notice; Subordination Request, Permitted Liens..................................... 75 Section 1406. Reliance on Opinion of Counsel............................................................. 76 Section 1407. Purchaser May Rely......................................................................... 76 Section 1408. Payment of Expenses........................................................................ 77
vi ARTICLE FIFTEEN CONVERSION AND DEMAND PAYMENT Section 1501. Conversion Following Election of Requisite Lenders......................................... 77 Section 1502. Exercise of Conversion Privilege; Demand Payment; Issuance of Common Stock; No Adjustment for Interest or Dividends............................................................... 77 Section 1503. Stated Ratio............................................................................... 79 Section 1504. Additional Issuances in the Event of Occurrence of Certain Events.......................... 79 Section 1505. Mergers.................................................................................... 80 Section 1506. Verification of Computations............................................................... 80 Section 1507. Notice of Additional Issuances or Other Property........................................... 81 Section 1508. Fractional Shares.......................................................................... 81 Section 1509. Taxes on Shares Issued..................................................................... 81 Section 1510. Reservation of Shares; Shares to Be Fully Paid; Compliance with Governmental Requirements; Listing of Company Common Stock......................................................... 81 Section 1511. Responsibility of Trustee.................................................................. 82 ARTICLE SIXTEEN MISCELLANEOUS Section 1601. Counterparts............................................................................... 82 TESTIMONIUM................................................................................................... SIGNATURE AND SEALS...........................................................................................
SCHEDULES 1.01 Permitted Indebtedness vii INDENTURE, dated as of July 22, 2004 between Atlantic Coast Entertainment Holdings, Inc. (the "Company"), a corporation duly organized and existing under the laws of the State of Delaware, ACE Gaming, LLC (herein called "Guarantor"), a limited liability company duly organized and existing under the laws of the State of New Jersey and each having its principal office c/o Sands Hotel and Casino at Indiana Avenue & Brighton Park, Atlantic City, New Jersey 08401, and Wells Fargo Bank, National Association, as Trustee (herein called the "Trustee"). The Company has duly authorized the creation of an issue of 3% Notes Due 2008 (herein called "Notes" or the "Securities"), of substantially the tenor and amount hereinafter set forth, and to provide therefore the Company has duly authorized the execution and delivery of this Indenture. The Company has duly authorized the creation of Liens to secure the Securities, and to provide therefor the Company has duly authorized the execution and delivery of the Security Documents to which it is a party. The Guarantor has duly authorized its guarantee of the Securities, and to provide therefor it has duly authorized the execution and delivery of this Indenture. The Guarantor has duly authorized the creation of Liens to secure its guarantee of the Securities, and to provide therefor it has duly authorized the execution and delivery of the Security Documents to which it is a party. This Indenture is subject to the provisions of the Trust Indenture Act of 1939, as amended, that are required to be part of this Indenture and shall, to the extent applicable, be governed by such provisions. All things necessary have been done to make the Securities, when executed by the Company and the Guarantor and authenticated by the Trustee and delivered hereunder and duly issued by the Company, the valid obligations of the Company, to make the Guarantee the valid obligation of Guarantor and to make this Indenture a valid agreement of each of the Company and the Guarantor, in accordance with their and its terms. For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities, as follows: ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION SECTION 101. Definitions. For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires: (i) the terms defined in this Article have the meanings assigned to them in this Article, and include the plural as well as the singular; (ii) all other terms used herein which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein, and the terms "cash transaction" and "self-liquidating paper," as used in TIA Section 311, shall have the meanings assigned to them in the rules of the Commission adopted under the Trust Indenture Act; (iii) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles, and, except as otherwise herein expressly provided, the term "generally accepted accounting principles" with respect to any computation required or permitted hereunder shall mean such accounting principles as are generally accepted at the date of such computation; (iv) any reference herein to any "first priority lien," "first priority security interest" or words of similar import or otherwise regarding the priority of any Lien, shall apply and refer, and shall be deemed to apply and refer, only to the Collateral and all such Liens shall, and shall be deemed to be: (A) subject and inferior to any Lien to secure Working Capital Indebtedness whether incurred prior to, on or after the Issue Date and (B) subject to any release or subordination contemplated in Section 1405 hereof. Any reference herein to the "terms of any release or subordination contemplated in Section 1405 hereof" or "any release or subordination" or words of similar import shall be deemed to refer to and include, without limitation, any and all terms, provisions and conditions of any such release or subordination and of all agreements, documents and instruments related thereto, associated therewith or arising from or in connection with any such release or subordination or any related or associated transaction; and (v) the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. "Acquired Indebtedness" means Indebtedness of a Person existing at the time such Person becomes a Subsidiary of the Company or is combined or acquired through an asset acquisition, merger or otherwise, with the Company or a Subsidiary of the Company, including, without limitation, Indebtedness incurred by such Person in connection with, or in anticipation of, such Person becoming a Subsidiary of the Company or of such acquisition, in each case which, if secured, is not secured by Collateral. "Act," when used with respect to any Holder, has the meaning specified in Section 104. "Affiliate" of any Person means any other Person that, directly or indirectly, controls, is controlled by or is under direct or indirect common control with, such Person and with respect to any natural Person, any other Person having a relationship by blood, marriage or adoption, not more remote than first cousins with such natural Person. For the purposes of this definition, "control" when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of Voting Stock or other equity interests, by contract or otherwise, and the terms "controlling" and "controlled" have meanings correlative to the foregoing. 2 "Allowed Indebtedness" means any Indebtedness or Preferred Stock the incurrence or issuance of which either (x) is consented to by the Requisite Lenders or (y) that: (i) is not secured by a Lien; (ii) is (or to the extent that it is) secured by a Lien on assets other than the Collateral; (iii) is secured by a Lien on Collateral which, except for and subject to any release or subordination contemplated by Section 1405 hereof, is inferior to the Liens of the Trustee on such Collateral; (iv) is secured by a Permitted Lien; (v) constitutes Acquired Indebtedness; or (vi) is incurred between or among the Company and its Subsidiaries. "Amortization Expense" means, for any Person for any period, the amount of the amortization expense (including, without limitation, the write-down of non-current assets, including CRDA Investments) that is reflected on the financial statements of such Person and its Subsidiaries consolidated in such financial statements for such period in accordance with GAAP. "Applicable Common Stock" has the meaning set forth in Section 301(f) of this Indenture. "Asset Acquisition" means (a) any capital contribution (including, without limitation, transfers of cash or other property to others or payments for property or services for the account or use of others, or otherwise), or purchase or acquisition of Capital Stock or other similar ownership or profit interest, by the Company or any of its Subsidiaries in any other Person, in either case pursuant to which such Person shall become a Subsidiary of the Company or any of its Subsidiaries or shall be merged with or into the Company or any of its Subsidiaries or (b) any acquisition by the Company or any of its Subsidiaries of the assets of any Person which constitute substantially all of an operating unit or business of such Person. "Asset Sale" means, as applied to any Person, any direct or indirect sale, conveyance, transfer, lease or other disposition (including, without limitation, by means of a Sale-Leaseback Transaction) by such Person or any Subsidiary of such Person to any Person other than such Person or a wholly-owned Subsidiary of such Person, in one transaction or a series of related transactions, of any Capital Stock of any Subsidiary of such Person or other similar equity interest of such Subsidiary or any other property or asset of such Person or any Subsidiary of such Person (provided that the term "Asset Sale" shall not include (a) sales, conveyances, transfers, leases or other dispositions in the ordinary course of business; (b) all other dispositions pursuant to which such Person receives, directly or indirectly, Net Cash Proceeds or fair market value of less than or equal to $5,000,000 in the aggregate in any twelve month period; (c) sales, conveyances, transfers, leases, or other dispositions of CRDA Investments); (d) sales, conveyances, transfers, leases or other transactions or dispositions made in accordance with the provisions of Section 1405 of this Indenture; (e) sales, conveyances, transfers, leases or other transactions or dispositions made pursuant to the terms of any agreement, document or instrument entered into in connection with any release or subordination that has occurred in accordance with the provisions of Section 1405 of this Indenture, including, without limitation, any sale or other disposition resulting from any default or foreclosure; or (f) any transaction (whether or not such transaction has already occurred) that the Requisite Lenders consent and agree shall not be deemed to constitute an "Asset Sale" ). 3 "Assets" means, as applied to any Person, any tangible or intangible assets, or rights or real or personal properties of such Person or any of its Subsidiaries including capital stock of Subsidiaries. "Assignment of Leases" means the Assignment, dated as of July 22, 2004, by Licensee in favor of the Trustee for its own benefit and the benefit of the Holders as the same may be amended from time to time. "Board of Directors" means either the board of directors of a Person or any duly authorized committee of that board. "Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of a Person to have been duly adopted by the Board of Directors of such Person and to be in full force and effect on the date of such certification, and delivered to the Trustee. "Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in The City of New York or the State of New Jersey are authorized or obligated by law or executive order to close. "Capital Stock" means, with respect to any Person, any and all shares, interests, participations, rights in, or other equivalents (however designated and whether voting or non-voting) of, such Person's capital stock, whether outstanding on the Issue Date or issued after such date, and any and all rights, warrants or options exchangeable for or convertible into such capital stock. "Capitalized Lease Obligation" means any obligation to pay rent or other amounts under a lease of (or other agreement conveying the right to use) any property (whether real, personal or mixed) that is required to be classified and accounted for as a capital lease obligation under GAAP, and, for the purpose hereof, the amount of such obligation at any date of determination shall be the capitalized amount thereof at such date, determined in accordance with GAAP. "Cash Equivalents" means any of the following, to the extent owned by the Company or any of its Subsidiaries free and clear of all Liens (other than Liens in favor of the Trustee or the Holders) and having a maturity of not greater than 270 days from the date of acquisition: (a) any evidence of Indebtedness issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (provided that the full faith and credit of the United States of America is pledged in support thereof); (b) insured certificates of deposit or acceptances of any commercial bank that is a member of the Federal Reserve System, that issues (or the parent of which issues) commercial paper rated as described in clause (c) below and that has combined capital and surplus and undivided profits of not less than $100,000,000; (c) commercial paper issued by a corporation (except an Affiliate of the Company) organized under the laws of any state of the United States or the District of Columbia and rated at least A-1 (or the then equivalent grade) by Standard & Poor's Corporation or at least Prime-1 (or the then equivalent grade) by Moody's Investors Service, Inc.; and (d) repurchase agreements and reverse repurchase agreements relating to marketable direct obligations issued or unconditionally guaranteed by the United States government or issued by any agency thereof (provided that the full faith and credit of the United States of America is pledged in support thereof); provided that 4 the terms of such agreements comply with the guidelines set forth in the Federal Financial Agreements of Depository Institutions with Securities Dealers and Others, as adopted by the Comptroller of the Currency. "Casino Control Act" means the New Jersey Casino Control Act, N.J. Stat. Ann. 5:12-1 et seq. (New Jersey Public Law 1977, C.110), and the regulations promulgated thereunder, N.J.A.C. 19:40-1.1 et seq., as from time to time amended, or any successor provision of law. "Casino Control Commission" means the New Jersey Casino Control Commission as established by Section 50 of the Casino Control Act or any successor agency appointed pursuant to the Casino Control Act. "Change of Control" means, after the Issue Date, an event or series of events by which any "person" (as such term is used in Section 13(d) and 14(d) of the Exchange Act), other than Carl C. Icahn and his Affiliates, or Parent and its Subsidiaries, is or becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a Person shall be deemed to have "beneficial ownership" of all shares that any such Person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly (including through ownership of Voting Stock of a Person owning, directly or indirectly, Voting Stock of the Company or Parent) of securities representing 50% or more of the combined voting power of the Voting Stock of the Company. "Collateral" has the meaning attributed to it in the Security Agreement and the Mortgage and includes all of the assets of the Company and its Subsidiaries (other than CRDA Investments and gaming receivables and revenues) as of the Issue Date and assets contemplated in Section 1404 of this Indenture; provided that for purposes of this Indenture and the Security Documents, the Collateral shall not include any asset to the extent that it has ceased to be subject to the Security Interest pursuant to Section 1405 hereof. "Collateral Account" shall have the meaning ascribed to such term in the Security Agreement. "Collateral Proceeds" means, subject to and as permitted by the terms of this Indenture and the terms of any release or subordination contemplated by Section 1405 hereof, (a) any Net Cash Proceeds received or receivable by the Company or the Guarantor as a result of an Asset Sale or Event of Loss that involves all or a portion of the Collateral and (b) all interest or other earnings on amounts in deposit in the Collateral Account. "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Securities Exchange Act of 1934, or, if at any time after the execution of this Indenture such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time. "Common Stock" means, with respect to any Person, any and all shares, interests, participations and other equivalents (however designated, whether voting or non-voting) of such Person's common stock, whether now outstanding or issued after the Issue Date, and includes, without limitation, all series and classes of such common stock. "Company" means Atlantic Coast Entertainment Holdings, Inc., until a successor Person shall have assumed the obligations of the Company pursuant to the applicable provisions 5 of Sections 801 and 802 of this Indenture, and thereafter "Company" shall mean such successor Person. "Company Common Stock" means the common stock, $.01 par value per share, of the Company. "Company Request" or "Company Order" means a written request or order signed in the name of the Company by its Chairman, its President, any Vice President, its Treasurer or an Assistant Treasurer, and delivered to the Trustee. "Consolidated" or "consolidated" refers to the consolidation of accounts in accordance with GAAP, and each reference to any such consolidation in this Indenture including, without limitation, "Consolidated Cash Flow," "Consolidated Coverage Ratio," "Consolidated Fixed Charges," "Consolidated Income Tax Expense," and "Consolidated Net Income" shall include and be deemed to include, if, prior to the calculation date, one or more acquisitions have been engaged in by the Company or any of its Subsidiaries (including through mergers or consolidations or other asset or business acquisitions or combination transactions), the accounts of such acquired person or business for the entire applicable reference period, and such acquisition shall be deemed to have occurred on the first day of the applicable reference period and shall be given pro forma effect, in all events exclusive of all obligations or charges: (x) of a non-recurring nature; (y) attributable to discontinued operations; and (z) otherwise attributable to operations or businesses disposed of prior to the Transaction Date. "Consolidated Cash Flow" means, for any Person for any period, the sum of: (i) the Consolidated Net Income of such Person and its Subsidiaries for such period, plus (ii) the sum of the following items (to the extent deducted in determining Consolidated Net Income and without duplication): (A) all Consolidated Fixed Charges; (B) Amortization Expense; (C) Depreciation Expense; and (D) Consolidated Income Tax Expense. "Consolidated Coverage Ratio" means for any Person the ratio of (a) Consolidated Cash Flow of such Person and its Subsidiaries for the four full fiscal quarters for which financial statements are available that immediately precede the date of the transaction or other circumstances giving rise to the need to calculate the Consolidated Coverage Ratio (the "Transaction Date") (or, for purposes of clause (b) of the definition of the term "Permitted Indebtedness," projected as contemplated therein) to (b) the Consolidated Fixed Charges for the fiscal quarter in which the Transaction Date occurs and to be accrued during any balance of such quarter and during the three fiscal quarters immediately following such fiscal quarter (based upon the pro forma amount of Indebtedness of such Person and its Subsidiaries outstanding on the Transaction Date and after giving effect to the transaction in question) (or, for purposes of clause (b) of the definition of the term "Permitted Indebtedness," projected as contemplated therein). For purposes of this definition, if the Transaction Date occurs before the date on which such Person's consolidated financial statements for the four full fiscal quarters after the Issue Date are first available, "Consolidated Cash Flow" and "Consolidated Fixed Charges" shall be calculated after giving effect on a pro forma basis as if the Securities outstanding on the Transaction Date were issued on the first day of such four full fiscal quarter period. In addition, "Consolidated Cash Flow" and "Consolidated Fixed Charges" shall be calculated after giving 6 effect on a pro forma basis for the period of such calculation to (i) the incurrence or retirement of any Indebtedness of such Person and its Subsidiaries at any time during the period (the "Reference Period") (A) commencing on the first day of the four full fiscal quarters ended before the Transaction Date for which financial statements are available and (B) to, and including, the Transaction Date, including, without limitation, the incurrence of the Indebtedness giving rise to the need to make such calculation, as if such Indebtedness were incurred or retired on the first day of the Reference Period; provided that if such Person or any of its Subsidiaries directly or indirectly guarantees Indebtedness of a third Person, the above clause shall give effect to the incurrence of such guaranteed Indebtedness as if such Person or such Subsidiary had directly incurred such guaranteed Indebtedness and (ii) any Asset Sale, Event of Loss or Asset Acquisition (including, without limitation, any Asset Acquisition giving rise to the need to make such calculation as a result of such Person or any of its Subsidiaries (including any Person who becomes a Subsidiary as result of the Asset Acquisition) incurring Acquired Indebtedness) occurring during the Reference Period and any retirement of Indebtedness in connection with such Asset Acquisition, as if such Asset Sale, Event of Loss or Asset Acquisition and/or retirement occurred on the first day of the Reference Period. Furthermore, in calculating the denominator (but not the numerator) of this "Consolidated Coverage Ratio," interest on Indebtedness determined on a fluctuating basis that cannot be determined in advance shall be deemed to accrue at the rate in effect on the Transaction Date for such entire period. "Consolidated Fixed Charges" means as applied to any Person for any period (a) the sum of the following items (without duplication): (i) the aggregate amount of interest reflected in the financial statements by such Person and its Subsidiaries in respect of their consolidated Indebtedness (including, without limitation, all interest capitalized by such Person and its Subsidiaries during such period, any amortization of debt discount and all commissions, discounts and other similar fees and charges owed by such Person or any of its Subsidiaries for letters of credit and bankers' acceptance financing and the net costs associated with Interest and Currency Rate Protection Obligations of such Person and its Subsidiaries); (ii) the aggregate amount of the interest component of rentals in respect of Capitalized Lease Obligations recognized by such Person and its Subsidiaries; (iii) to the extent any Indebtedness of any other Person is guaranteed by such Person or any of its Subsidiaries, the aggregate amount of interest paid or accrued by such other Person during such period attributable to any such guaranteed Indebtedness; (iv) dividends on Preferred Stock of any Subsidiary that is held by a Person other than such Person or a wholly-owned Subsidiary; (v) the interest portion of any deferred payment obligation and less (b) to the extent included in clause (a) above, amortization or write-off of deferred financing costs of such Person and its Subsidiaries and any charge related to any premium or penalty paid in connection with redeeming or retiring any Indebtedness before its stated maturity, with the foregoing amounts in the case of both clauses (a) and (b) above, as determined in accordance with GAAP. "Consolidated Income Tax Expense" means, as applied to any Person for any period, federal, state, local and foreign income taxes of such Person and its Subsidiaries for such period, determined in accordance with GAAP; provided that, for purposes hereof, "income taxes" shall specifically exclude any taxes paid to or imposed by a Gaming Authority. "Consolidated Net Income" means, as applied to any Person for any period, the aggregate of the consolidated Net Income (or net loss) of such Person and its Subsidiaries (determined in accordance with GAAP) less (to the extent included in such Consolidated Net 7 Income): (a) the Net Income of any other Person in which such Person and any of its Subsidiaries has a joint interest with a third party (which interest does not cause the Net Income of such other Person to be consolidated into the Net Income of such Person and its Subsidiaries in accordance with GAAP) except to the extent of the amount of cash dividends or other cash distributions in respect of Capital Stock actually paid (out of funds legally available therefrom) to and received by such Person or a Subsidiary, net of any taxes applicable thereto; (b) items (other than the tax benefit of the utilization of net operating loss carryforwards or alternative minimum tax credits) classified as extraordinary; (c) the net income of any Subsidiary (other than a Guarantor) to the extent that the declaration of dividends or similar distributions by such Subsidiary of that income is not at the time permitted, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, law, rule or governmental regulations applicable to that Subsidiary or its stockholders; (d) any net gain or loss resulting from an Asset Sale or Event of Loss or reserves relating thereto by such Person or any of its Subsidiaries; (e) any gain (but not loss), net of taxes, realized upon the termination of any employee pension benefit plan; and (f) all income taxes of such Person and its Subsidiaries accrued according to GAAP for such period attributable to extraordinary gains or losses. "Convertibility Notice" has the meaning set forth in Section 1501(a) hereof. "Corporate Trust Office" means the principal corporate trust office of the Trustee, at which at any particular time its corporate trust business shall be administered, which office at the date of execution of this Indenture is located at Wells Fargo Bank, National Association, Corporate Trust Services, Sixth and Marquette, MAC N9303-120, Minneapolis, MN 55479, except that with respect to presentation of Securities for payment or for registration of transfer or exchange, such term shall mean the office or agency of the Trustee at which, at any particular time, its corporate agency business shall be conducted. "Corporation" includes corporations, associations, companies and business trusts. "CRDA Investments" means Investments in securities issued by, and monies deposited with, the Casino Reinvestment Development Authority of the State of New Jersey. "Default" means any Event of Default, or an event that would constitute an Event of Default but for the requirement that notice be given or time elapse or both. "Demand Payment" has the meaning set forth in Section 301 hereof. "Demand Payment Date" means the date specified by the Requisite Lenders in the Demand Payment Notice. "Demand Payment Notice" has the meaning set forth in Section 301 hereof. "Depreciation Expense" means, as applied to any Person for any period, the provision for depreciation that is reflected on the consolidated financial statements of such Person and its Subsidiaries in accordance with GAAP. "Disqualified Holders" shall have the meaning provided in Section 1109. "Disqualified Stock" means, with respect to any Person, any Capital Stock or other similar ownership or profit interest that, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, matures or is 8 mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is exchangeable for Indebtedness, or is redeemable at the option of the holder thereof, in whole or in part, on or before the Maturity Date of the Securities. "Division of Gaming Enforcement" means the Division of Gaming Enforcement of the New Jersey Department of Law and Public Safety as established by Section 55 of the Casino Control Act or any successor division or agency. "Event of Default" has the meaning specified in Section 501. "Event of Loss" means, with respect to any property or asset (tangible or intangible, real or personal), any of the following: (a) any loss, destruction or damage of such property or asset; (b) the condemnation or seizure of such property or asset or the exercise of any right of eminent domain or navigational servitude; or (c) any actual condemnation, seizure or taking, by exercise of the power of eminent domain or otherwise, of such property or asset, or confiscation of such property or asset or the requisition of the use of such property or asset; provided, that in any such case the Net Cash Proceeds relating thereto are in excess of $5 million; provided that an "Event of Loss" shall not include any event or occurrence (whether or not such event or occurrence has already occurred) that the Requisite Lenders consent and agree shall not be deemed to constitute and "Event of Loss." "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Existing Notes" means the 11% Notes due 2005 of Parent from time to time outstanding. "Fair Market Value" or "fair value" means, with respect to any asset or property, the price which could be negotiated in an arm's-length free market transaction, for cash, between a willing seller and a willing buyer, neither of whom is under undue pressure or compulsion to complete the transaction. Fair Market Value shall be determined by the Board of Directors of the Company acting in good faith and shall be evidenced by a Board Resolution delivered to the Trustee. "Federal Bankruptcy Code" means the 1978 Bankruptcy Act of Title 11 of the United States Code, as amended from time to time. "FF&E Financing" means Indebtedness, the proceeds of which will be used solely to finance the acquisition or lease of furniture, fixtures or equipment ("FF&E") used by the Person incurring such Indebtedness in the ordinary course in the operation of a Permitted Line of Business and secured by a Lien on such FF&E. "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board that are applicable as of the Issue Date. "Gaming Authority" means any agency, authority, board, bureau, commission, department, office or instrumentality of any nature whatsoever of the United States federal government or foreign government, any state, province or any city or other political subdivision or otherwise and whether now or hereafter in existence, or any officer or official thereof with 9 authority to regulate any gaming operation (or proposed gaming operation) owned, managed, or operated by the Company or any of its Subsidiaries. "Gaming Laws" means each gaming law of any applicable Gaming Authority as amended from time to time, and the regulations promulgated and rulings issued thereunder applicable to the Company or any of its Subsidiaries or shareholders. "Grantor" means (a) any "Grantor" as defined in the Security Agreement; (b) any "Mortgagor" as defined in the Mortgage; and (c) any other Person that grants a security interest in its assets in favor of the Trustee for its benefit and the benefit of the Holders. "Guarantee" means the guarantee of the Guarantor set forth in Article Twelve. "Guarantor" means Licensee, until a successor Person shall have assumed the obligations of Licensee pursuant to the applicable provisions of Section 801 or 802 of this Indenture, and thereafter "Guarantor" shall mean such successor Person. "Holder" means a Person in whose name a Security is registered in the Security Register. A person shall cease to be a Holder for all purposes upon conversion of such Security into Company Common Stock pursuant to Article Fifteen of this Indenture. "incur" means to directly or indirectly create, assume, suffer to exist, guarantee in any manner, or in any manner become liable for the payment of. "Indebtedness" of any Person means (a) any liability, contingent or otherwise, of such Person (whether or not the recourse of the lender is to the whole of the assets of such Person, or only to a portion thereof), (i) for borrowed money; (ii) evidenced by a note, bond, debenture or similar instrument, letters of credit, acceptances or other similar facilities (other than a trade payable or a current liability incurred in the ordinary course of business); or (iii) for the payment of money relating to a Capitalized Lease Obligation or other obligation relating to the deferred purchase price of property or services (including a purchase money obligation); (b) any liability of others of the kind described in the preceding clause (a) which such Person has guaranteed including, without limitation, (i) to pay or purchase such liability, (ii) to supply funds to or in any other manner invest in the debtor (including an agreement to pay for property or services irrespective of whether such property is received or such services are rendered; and (iii) to purchase, sell or lease (as lessee or lessor) property or to purchase or sell services, primarily for the purpose of enabling a debtor to make a payment of such Indebtedness or to assure the holder of such Indebtedness against loss; (c) any obligation secured by a Lien to which the property or assets of such Person are subject, whether or not the obligations secured thereby shall have been assumed by or shall otherwise be such Person's legal liability; (d) all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any Capital Stock of or other ownership or profit interest in such Person or any of its Affiliates or any warrants, rights or options to acquire such Capital Stock, valued, in the case of Disqualified Stock, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends; (e) all Interest and Currency Rate Protection Obligations; and (f) any and all deferrals, renewals, extensions and refundings of any liability of the kind described in any of the preceding clauses. "Indenture" means this instrument as originally executed and as it may from time to time be supplemented, changed, modified or amended (by any addition to or elimination of, the 10 provisions hereof, or otherwise) by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof. "Independent," when used with respect to any Person, means such other Person who (a) does not have any material financial interest in the Company or in any Affiliate of the Company and (b) is not an officer, employee, promoter, underwriter, trustee, partner or person performing similar functions for the Company or a spouse, family member or other relative of any such Person; provided, that with respect to any director of any corporation, such director shall also be deemed to be "Independent" if such director meets the requirements for independence established by any "national securities exchange" (as contemplated in the Securities Exchange Act of 1934) for audit committee membership. Whenever it is provided in this Indenture that any Independent Person's opinion or certificate shall be furnished to the Trustee, such Person shall be appointed by the Company. "Interest and Currency Rate Protection Obligations" means the obligations of any Person pursuant to any interest rate swap, cap or collar agreement, interest rate future or option contract, currency swap agreement, currency future or option contract and other similar agreement designed to hedge against fluctuations in interest rates or foreign exchange rates. "Investment" in any Person means any direct or indirect loan, advance, guarantee or other extension of credit or capital contribution to (including, without limitation, transfers of cash or other property to others or payments for property or services for the account or use of others (excluding unbilled or uncollected receivables), or otherwise), or purchase or acquisition of Capital Stock, warrants, rights, options, bonds, notes, debentures or other securities or evidences of Indebtedness issued by, any other Person or Indebtedness of any other Person secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien (including, without limitation, accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness. "Issue Date" means the date of original issuance of the Securities. "Licensee" means ACE Gaming, LLC, a New Jersey limited liability company. "Lien" means any mortgage, lien (statutory or other), pledge, security interest, encumbrance, hypothecation, assignment for security, or other security agreement of any kind or nature whatsoever. For purposes of this Indenture, a Person shall be deemed to own subject to a Lien any property which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, or other title retention agreement relating to such Person. "Maturity," when used with respect to any Security, means the date on which the principal of such Security or an installment of principal becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, notice of redemption or otherwise. "Maturity Date," when used with respect to any Security, means the date specified in such Security as the fixed date on which the final installment of principal of such Security is due and payable. 11 "Mortgage" means the Mortgage and Fixture Security Agreement, dated as of July 22, 2004, duly executed by Guarantor in favor of the Trustee for the benefit of the Holders. "Net Cash Proceeds" means, with respect to any Asset Sale or Event of Loss, as the case may be, the proceeds thereof in the form of cash or Cash Equivalents received by the Company or any of its Subsidiaries (whether as initial consideration, through the payment or disposition of deferred compensation or the release of reserves), after deducting therefrom (without duplication): (a) reasonable and customary brokerage commissions, underwriting fees and discounts, legal fees, finders fees and other similar fees and expenses incurred in connection with such Asset Sale or Event of Loss; (b) provisions for all taxes payable as a result of such Asset Sale or Event of Loss; (c) payments made to retire Indebtedness (other than payments on the Securities) secured by the assets subject to such Asset Sale or Event of Loss to the extent required pursuant to the terms of such Indebtedness; and (d) appropriate amounts to be provided by the Company or any of its Subsidiaries, as the case may be, as a reserve, in accordance with GAAP, against any liabilities associated with such Asset Sale or Event of Loss and retained by the Company or any of its Subsidiaries, as the case may be, after such Asset Sale or Event of Loss, including, without limitation, pension and other post-employment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations associated with such Asset Sale or Event of Loss, in each case to the extent, but only to the extent, that the amounts so deducted are, at or around the time of receipt of such cash or Cash Equivalents, actually paid to a Person that is not an Affiliate of the Company or, in the case of reserves, are actually established and, in each case, are properly attributable to such Asset Sale or Event of Loss. "Net Income" means, with respect to any Person for any period, the net income (or loss) of such Person determined in accordance with GAAP. "Officers' Certificate" for any Person means a certificate signed by the Chairman, the President, Executive Vice President or a Vice President, and by the Chief Financial Officer or the Secretary of such Person, and delivered to the Trustee. "Opinion of Counsel" means a written opinion of counsel for the Company or any of its Affiliates, including an employee of any such Person, or any other counsel reasonably acceptable to the Trustee. "Outstanding," when used with respect to Securities, means, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except: (i) Securities theretofore cancelled by the Trustee or delivered to the Trustee for cancellation; (ii) Securities, or portions thereof, for whose payment, redemption or conversion money or Company Common Stock in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent in accordance with the applicable terms of this Indenture) for the Holders of such Securities; provided that, if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made; 12 (iii) Securities, except to the extent provided in Sections 1302 and 1303, with respect to which the Company has effected defeasance and/or covenant defeasance as provided in Article Thirteen; and (iv) Securities in respect of which, pursuant to Section 306, other Securities have been authenticated and delivered pursuant to this Indenture, other than any such Securities in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Securities are held by a bona fide purchaser in whose hands the Securities are valid obligations of the Company; provided, however, that in determining whether the Holders of the requisite principal amount of Outstanding Securities have given any request, demand, authorization, direction, consent, notice or waiver hereunder or taken any other action, Securities owned by the Company or its Subsidiaries shall be disregarded and deemed not to be Outstanding (but the Securities of any other Affiliates or other Persons shall be deemed for all such purposes to be Outstanding). In determining whether the Trustee shall be protected in making such calculation or in relying upon any such request, demand, authorization, direction, notice, consent or waiver or other action, only Securities owned by the Company or its Subsidiaries which the Trustee knows to be so owned shall be so disregarded. Securities owned by the Company or its Subsidiaries which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Securities and that the pledgee is not the Company, the Guarantor, or a Subsidiary of the Company. "Parent" means GB Holdings, Inc. "Paying Agent" means any Person (including the Company acting as Paying Agent) authorized by the Company to pay the principal of (and premium, if any, on) or interest on any Securities on behalf of the Company. "Permitted Indebtedness" means any of the following Indebtedness to the extent incurred by the Company: (i) Indebtedness under the Notes, the Indenture or any Security Document; (ii) Indebtedness if, immediately after giving pro forma effect to the incurrence thereof, the projected Consolidated Coverage Ratio of the Company for the next full fiscal quarter, as determined by the Board of Directors of the Company based upon its projections, would be no less than 1.5:1; (iii) Indebtedness having a maturity at the time of its incurrence of one year or less incurred solely to provide funds for working capital purposes; provided that such Indebtedness (A) does not exceed $15 million outstanding in the aggregate at any one time and (B) for a period of 60 consecutive days during any calendar year, does not exceed in the aggregate $5 million; (iv) FF&E Financing and/or Capitalized Lease Obligations so long as the sum of (x) the aggregate principal amount of such FF&E Financing and (y) the aggregate amount of such Capitalized Lease Obligations does not exceed $50 million in the aggregate at any time; 13 (v) Indebtedness of the Company that is outstanding on the Issue Date and the items listed on Schedule 1.01 hereof on the Issue Date; and (vi) purchase money mortgage notes or other Indebtedness to acquire Block 47, Lot 8 on the Tax Map of the City of Atlantic City, and to acquire Block 156, Lots 28, 40 and 41 on the Tax Map of the City of Atlantic City in fee simple or by long-term lease, which purchase money mortgage note or similar indebtedness encumbers only such Block and Lot numbers on the Tax Map of the City of Atlantic City, or any other Indebtedness for the purpose of engaging in any transaction in which the value of the assets acquired, for GAAP purposes (including applicable goodwill) is equal to or greater than the financing undertaken in connection with such transaction. "Permitted Liens" means: (i) Liens on property acquired after the Issue Date by way of a merger or other business combination of a Person with or into the Company or any Subsidiary or the acquisition of a Person or its assets by the Company or any Subsidiary or otherwise and provided that except as permitted in this Indenture such Liens do not extend to any Collateral; (ii) statutory Liens to secure the performance of obligations, surety or appeal bonds, performance bonds or other obligations of a like nature incurred in the ordinary course of business (exclusive of obligations in respect of the payment of borrowed money), or for taxes, assessments or governmental charges or claims, provided that in each case the obligations are not yet delinquent or are being contested in good faith by appropriate proceedings promptly instituted and diligently concluded and any reserve or other adequate provision as shall be required in conformity with GAAP shall have been made therefor; (iii) licenses, leases or subleases granted in the ordinary course of business to others not interfering in any material respect with the business of the Company or any Subsidiary; (iv) easement granted to the City of Atlantic City, New Jersey, pursuant to municipal ordinance to extend Mt. Vernon Avenue right-of-way upon part of Block 48, Lot 8 on the Tax Map of the City of Atlantic City; (v) with respect to the property involved, easements, rights-of-way, navigational servitudes, restrictions, minor defects or irregularities in title and other similar charges or encumbrances which do not interfere in any material respect with the ordinary conduct of business of the Company and its Subsidiaries as now conducted or as contemplated herein; (vi) Liens granting a security interest in CRDA Investments to the Casino Redevelopment Authority of New Jersey or any other entity as required by applicable law; (vii) Liens permitted by the Security Documents, including, without limitation, Liens granted under or to secure Permitted Indebtedness; (viii) Liens (a) on Assets or property of any kind other than Collateral and (b) on Collateral (including, without limitation, any such Liens incurred to secure Allowed Indebtedness) which, except for and subject to any release or subordination contemplated in Section 1405 hereof, shall be inferior to the Liens of the Trustee on such Collateral; 14 (ix) Liens (which shall for all purposes be and be deemed to be superior to the Liens of the Trustee under the Security Documents) to secure Working Capital Indebtedness; and (x) Liens consented to by the Requisite Lenders. "Permitted Line of Business" means the casino gaming business and any business that is related to, ancillary or supportive of, connected with or arising out of the gaming business (including, without limitation, developing and operating lodging, dining, sports or entertainment facilities, transportation services, software development or other related activities or enterprises and any additions or improvements thereto) and any other business that the Requisite Lenders consent and agree shall be deemed to constitute a "Permitted Line of Business." "Permitted Payment" means the payment of (a) current scheduled interest due on the Existing Notes; (b) Parent's normal, ordinary course operating expenses (including legal and accounting costs, directors' and officers' insurance premiums and fees for Commission filings) not to exceed in the aggregate $250,000 in any twelve month period without the consent of the Requisite Lenders; and (c) any amount required to be paid or reimbursed to the trustee under Section 6.06 of the Second Amended and Restated Indenture, dated as of July 22, 2004, governing the Existing Notes, which under no circumstances will include any obligation to make any payments to the trustee with respect of principal or interest owed on the Existing Notes; provided however that with respect to payments pursuant to clauses (a) and (b) the following conditions must be satisfied unless consented to by the Requisite Lenders: (i) such payment is required to be made prior to the maturity date of the Existing Notes and (ii) at the time of such payment and after giving effect thereto, no Event of Default exists and no event that could result in an Event of Default has occurred or is incipient. "Permitted Related Investment" means the direct or indirect acquisition, repair or restoration (including, without limitation, as permitted in Article 9 of the Mortgage) of property or other Assets (including, without limitation, Securities of any person possessing any such Asset or with rights to, any Assets) to be used in connection with a Permitted Line of Business. "Person" means an individual, partnership, corporation (including a business trust), joint stock company, trust, unincorporated association, joint venture or other entity, or a government or any political subdivision or agency thereof. "Predecessor Security" of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security; and, for the purposes of this definition, any Security authenticated and delivered under Section 306 in exchange for a mutilated security or in lieu of a lost, destroyed or stolen Security shall be deemed to evidence the same debt as the mutilated, lost, destroyed or stolen Security. "Preferred Stock," as applied to the Capital Stock of any Person, means Capital Stock of such Person of any class or classes (however designated) that ranks prior, as to the payment of dividends on or to the distribution of assets upon any voluntary or involuntary liquidation, dissolution or winding up of such Person, to shares of Capital Stock of any other class of such Person. "Redemption Date," when used with respect to any Security to be redeemed, in whole or in part, means the date fixed for such redemption by or pursuant to this Indenture. 15 "Redemption Price," when used with respect to any Security to be redeemed, means 100% of the principal amount of such Security, together with accrued, unpaid interest. "Release Notice" means a written notice of the Company or any of its Subsidiaries in the form of a Company Order delivered pursuant to Section 1405(a). "Requisite Lenders" means the holders of a majority in principal amount of the Outstanding Securities. "Responsible Officer," when used with respect to the Trustee, means the chairman or any vice-chairman of the board of directors, the chairman or any vice-chairman of the executive committee of the board of directors, the chairman of the trust committee, the president, any vice president, the secretary, any assistant secretary, the treasurer, any assistant treasurer, the cashier, any assistant cashier, any trust officer or assistant trust officer, the controller or any assistant controller or any other officer of the Trustee customarily performing functions similar to those performed by any of the above-designated officers, and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Restricted Payment" means any of the following: (a) the declaration or payment of any dividend or any other distribution on Capital Stock of the Company or any Subsidiary or any payment made to the direct or indirect holders (in their capacities as such) of Capital Stock of the Company or any Subsidiary in respect of that stock (other than (i) dividends or distributions payable solely in Capital Stock (other than Disqualified Stock) and (ii) in the case of a Subsidiary, dividends or distributions payable to the Company or to a wholly-owned Subsidiary); (b) the purchase, defeasance, redemption or other acquisition or retirement for value of any Capital Stock of the Company or any Subsidiary (other than Capital Stock of such Subsidiary held by the Company or any of its wholly-owned Subsidiaries); and (c) the making of any principal payment on, or the purchase, defeasance, repurchase, redemption or other acquisition or retirement for value (in each case before any scheduled payment date, scheduled maturity, scheduled repayment or scheduled sinking fund payment) of, any Indebtedness (other than Securities) which is subordinated in any manner in right of payment to the Securities (other than: (i) Indebtedness acquired in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of acquisition or (ii) Allowed Indebtedness); provided that the term "Restricted Payment" shall not include any payment, transaction or occurrence that the Requisite Lenders consent and agree shall not be deemed to constitute a "Restricted Payment." "Sale-Leaseback Transaction" means any arrangement with any Person providing for the leasing by the Company or any Subsidiary of any real or tangible personal property, which property has been or is to be sold or transferred by the Company or any such Subsidiary to such Person or its Affiliates in contemplation of such leasing. "Sands" means the Sands Hotel and Casino located in Atlantic City, New Jersey. "Securities" has the meaning stated in the first recital of this Indenture and more particularly means any Securities authenticated and delivered under this Indenture. 16 "Security Agreement" means the Security Agreement contemporaneously herewith made by each of Guarantor and the Company to the Trustee for its benefit and the benefit of the Holders, as the same may be amended from time to time. "Security Documents" means this Indenture, the Security Agreement, the Assignment of Leases, and the Mortgage and any other mortgage, deed of trust, security agreement or similar instrument securing the Company's or the Guarantor's obligations with respect to the Securities or under this Indenture or any of the other Security Documents. "Security Interest" has the meaning specified in Section 1401(a). "Security Register" and "Security Registrar" have the respective meanings specified in Section 305. "Stated Maturity," when used with respect to any Security, means the earlier of (a) the date specified in such Security as the fixed date on which the principal of such Security is due and payable, including pursuant to any mandatory redemption provision (but excluding any provision providing for the repurchase of such security at the option of the holder thereof) and (b) the Demand Payment Date. "Stated Ratio" has the meaning specified in Section 1503. "Subordination Determination" has the meaning specified in Section 1405(b). "Subordination Request" means a written request of the Company or any of its Subsidiaries in the form of a Company Order delivered pursuant to Section 1405(b). "Subsidiary" of any Person means any corporation, partnership, joint venture, trust or estate of which (or in which) more than 50% of (a) the issued and outstanding Capital Stock having ordinary voting power to elect a majority of the Board of Directors of such corporation (irrespective of whether at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency); (b) the interest in the capital or profits of such partnership or joint venture; or (c) the beneficial interest in such trust or estate, is at the time directly or indirectly owned or controlled by such Person, by such Person and one or more of its other Subsidiaries or by one or more of such Person's other Subsidiaries. "Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939, as amended from time to time. "Trustee" means the Person named as the "Trustee" in the first paragraph of this Indenture until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean such successor Trustee. "United States Government Obligations" means securities which are (i) direct obligations of the United States of America for the payment of which its full faith and credit is pledged or (ii) obligations of a Person, the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America. "Vice President," when used with respect to the Company or the Trustee, means any vice president, whether or not designated by a number or a word or words added before or after the title "vice president." 17 "Voting Stock" of any Person means Capital Stock of such Person which ordinarily has voting power for the election of directors (or persons performing similar functions) of such Person, whether at all times or only as long as no senior class of securities has such voting power by reason of any contingency. "Working Capital Indebtedness" means Indebtedness designated as such by the Board of Directors of the Company, the proceeds of which are to be held or applied for working capital purposes, not to exceed, at any one time outstanding, in the aggregate, principal of $25 million (plus interest accrued for not more than 365 days) for all such Indebtedness of the Company and its Subsidiaries. SECTION 102. Compliance Certificates and Opinions. Upon any application or request by the Company or the Guarantor to the Trustee to take any action under any provision of this Indenture, the Company or the Guarantor shall furnish to the Trustee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Indenture (including any covenant compliance with which constitutes a condition precedent) relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or request, no additional certificate or opinion need be furnished. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than pursuant to Section 1008) shall include: (i) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto; (ii) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (iii) a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (iv) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. SECTION 103. Form of Documents Delivered to Trustee. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Any certificate or opinion of an officer of the Company or the Guarantor may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the 18 certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company or the Guarantor stating that the information with respect to such factual matters is in the possession of the Company or the Guarantor, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. SECTION 104. Acts of Holders. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture or otherwise to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by agents duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Company or the Guarantor. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and conclusive in favor of the Trustee and the Company or the Guarantor, if made in the manner provided in this Section. (b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustee deems sufficient. (c) The principal amount and serial numbers of Securities held by any Person, and the date of holding the same, shall be proved by the Security Register. (d) If the Company or the Guarantor shall solicit from the Holders of Securities any request, demand, authorization, direction, notice, consent, waiver or other Act, the Company or the Guarantor may, at its option, by or pursuant to Board Resolution, fix in advance a record date for the determination of Holders entitled to give such request, demand, authorization, direction, notice, consent, waiver or other Act, but the Company or the Guarantor shall have no obligation to do so. Notwithstanding TIA Section 316(c), such record date shall be the record date specified in or pursuant to such Board Resolution, which shall be a date not earlier than the date 30 days prior to the first solicitation of Holders generally in connection therewith and not later than the date such solicitation is completed. If such a record date is fixed, such request, demand, authorization, direction, notice, consent, waiver or other Act may be given before or after such record date, but only the Holders of record at the close of business on such record date shall be 19 deemed to be Holders for the purposes of determining whether Holders of the requisite proportion of Outstanding Securities have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, waiver or other Act, and for that purpose the Outstanding Securities shall be computed as of such record date; provided that no such authorization, agreement or consent by the Holders on such record date shall be deemed effective unless it shall become effective pursuant to the provisions of this Indenture not later than eleven months after the record date. (e) Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefore or in lieu thereof including, without limitation, in respect of anything done, omitted or suffered to be done by the Trustee or the Company or the Guarantor in reliance thereon, whether or not notation of such action is made upon such Security. (f) For the purpose of the Company or the Guarantor complying with any requirement of the Casino Control Commission, or the Division of Gaming Enforcement or of the Casino Control Act, every holder, intermediary holder, intermediary beneficial holder and beneficial holder of a Security shall be deemed to authorize any Holder and any other holder, intermediary holder, intermediary beneficial holder and beneficial holder of a Security, upon written request of an Officer of the Company, the Guarantor, or the Trustee expressing reliance on this Section and enclosing a copy of this Section, to release, and any such holder, intermediary holder, intermediary beneficial holder and beneficial holder shall be required to release, to the Company, the Guarantor, or the Trustee, as the case may be, the name, address, telephone number, principal contact person, and amount of such holdings, intermediary holdings, intermediary beneficial holdings and beneficial holdings of Securities of each such holder, intermediary holder, intermediary beneficial holder and beneficial holder of a Security. SECTION 105. Notices, etc., to Trustee, Company and Guarantor. Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with, (i) the Trustee by any Holder, the Company or the Guarantor shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with the Trustee at its Corporate Trust Office, Attention: Corporate Trust Administration, or (ii) the Company or the Guarantor by the Trustee or by any Holder shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to the Company or the Guarantor, as the case may be, addressed to it at the address of its principal office specified in the first paragraph of this Indenture, with a copy to: Sands Hotel and Casino, Indiana Avenue and Brighton Park, Atlantic City, N.J. 08401, or at any other address previously furnished in writing to the Trustee by the Company or the Guarantor, as the case may be. SECTION 106. Notice to Holders; Waiver. Where this Indenture provides for notice of any event to Holders, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first- 20 class postage prepaid, to each Holder affected by such event, at his address as it appears in the Security Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Any notice mailed to a Holder in the manner herein prescribed shall be conclusively deemed to have been received by such Holder, whether or not such Holder actually receives such notice. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case by reason of the suspension of or irregularities in regular mail service or by reason of any other cause, it shall be impracticable to mail notice of any event to Holders when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Trustee shall be deemed to be a sufficient giving of such notice for every purpose hereunder. Any notices hereunder that are required to be given to the Casino Control Commission shall be addressed to: Document Control Unit, Casino Control Commission, Tennessee Avenue and the Boardwalk, Arcade Building, Atlantic City, New Jersey 08401, Attention: Chief of Administrative Operations. Any notices hereunder that are required to be given to the Division of Gaming Enforcement shall be addressed to: Division of Gaming Enforcement, 140 East Front Street, CN-047, Trenton, New Jersey 08625, Attention: Deputy Director for the Division of Gaming Enforcement. SECTION 107. Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. SECTION 108. Successors and Assigns. All covenants and agreements in this Indenture and in the Security Documents by each of the Company or the Guarantor shall bind its successors and assigns, whether so expressed or not. SECTION 109. Separability Clause. In case any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 110. Benefits of Indenture. Nothing in this Indenture or in the Securities, express or implied, shall give to any Person, other than the parties hereto, any Paying Agent, any Securities Registrar and their successors hereunder, and the Holders, any benefit or any legal or equitable right, remedy or claim under this Indenture. 21 SECTION 111. Governing Law. This Indenture and the Securities shall be governed by and construed in accordance with the law of the State of New York. This Indenture is subject to the provisions of the Trust Indenture Act of 1939, as amended, that are required to be part of this Indenture and shall, to the extent applicable, be governed by such provisions. SECTION 112. Legal Holidays. In any case where any Interest Payment Date, Redemption Date, sinking fund payment date or Stated Maturity or Maturity of any Security shall not be a Business Day, then (notwithstanding any other provision of this Indenture or of the Securities) payment of interest or principal (and premium, if any) need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the Interest Payment Date, Redemption Date or sinking fund payment date, or at the Stated Maturity or Maturity; provided that no interest shall accrue on such payment for the period from and after such Interest Payment Date, Redemption Date, sinking fund payment date, Stated Maturity or Maturity, as the case may be. SECTION 113. Casino Control Act. Notwithstanding the provisions of Section 111 hereof, each of the provisions of this Indenture is subject to and shall be enforced in compliance with the provisions of the Casino Control Act, to the extent applicable, and the regulations promulgated thereunder, unless such provisions are in conflict with the TIA, in which case the TIA shall control. The Securities are to be held subject to the condition that if a holder thereof is found to be disqualified by the Casino Control Commission pursuant to the provisions of the Casino Control Act, such holder shall dispose of the Securities in accordance with the provisions of Section 1109 hereof. The Company shall have the right to repurchase the Securities at the lowest of (a) the principal amount thereof; (b) the amount which the Disqualified Holder or beneficial owner paid for the Securities, together with accrued interest up to the date of the determination of disqualification; or (c) the market value of such Securities. ARTICLE TWO SECURITY FORMS SECTION 201. Forms Generally. The Securities and the Trustee's certificate of authentication shall be in substantially the forms set forth in this Article, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or as may, consistently herewith, be determined by the officers executing such Securities, as evidenced by their execution of the Securities. Any portion of the text of any Security may be set forth on the reverse thereof, with an appropriate reference thereto on the face of the Security. 22 The definitive Securities shall be printed, lithographed or engraved on steel-engraved borders or may be produced in any other manner, all as determined by the officers of the Company executing such Securities, as evidenced by their execution of such Securities. SECTION 202. Form of Face of Notes. ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC. 3% NOTE DUE 2008 No. _______________________________ $_________________________________ Atlantic Coast Entertainment Holdings, Inc., a Delaware corporation (herein called the "Company," which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to __________ or registered assigns in full satisfaction of the principal sum of __________ U.S. Dollars, and interest which shall accrue thereon at a rate of 3% per annum compounded on each anniversary of the date hereof , either (a) on the Demand Payment Date, the Applicable Common Stock or (b) if the Demand Payment Date does not occur on or prior to July 22, 2008, then on July 22, 2008 cash in the amount of such principal plus accrued interest. The obligations under this Security shall be deemed fully paid, satisfied, discharged and extinguished as contemplated in the Indenture. Notwithstanding anything contained herein, the rate of interest on the Securities shall not exceed the highest rate permitted by law. Payment of this Security will be made at the office or agency of the Company maintained for that purpose in The City of New York, or at such other office or agency of the Company as may be maintained for such purpose either (i) in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts in the case of payment pursuant to clause (b) above or (ii) in Applicable Common Stock in the case of payment pursuant to clause (a) above. Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been duly executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture, or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed Dated: July 22, 2004 Atlantic Coast Entertainment Holdings, Inc. By:__________________________________________ Attest: _________________________________________ Authorized Signature 23 SECTION 203. Form of Reverse of Notes. This Security is one of a duly authorized issue of securities of the Company designated as its 3% Notes Due 2008 (herein called the "Securities"), limited (except as otherwise provided in the Indenture referred to below) in aggregate principal amount to $66,258,970, which may be issued under an indenture (herein called the "Indenture"), dated as of July 22, 2004 between the Company, ACE Gaming, LLC (the "Guarantor") and Wells Fargo Bank, National Association, as trustee (herein called the "Trustee," which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties, obligations and immunities thereunder of the Company, the Trustee and the Holders of the Securities, and of the terms upon which the Securities are, and are to be, authenticated and delivered. Interest on the Securities shall be computed on the basis of a 360-day year of twelve 30-day months. The Securities are subject to redemption upon not less than 30 nor more than 60 days' notice, at any time prior to the Company's receipt of a Demand Payment Notice (or, with respect to a particular Note, a notice of payment in accordance with Section 1502 of the Indenture), as a whole or in part, at the election of the Company but only if such election is consented to by the Requisite Lenders, at a Redemption Price equal to 100% of the principal amount, together in the case of any such redemption with accrued, unpaid interest to the Redemption Date, all as provided in the Indenture. Each of the provisions of this Security is subject to and shall be enforced in compliance with the provisions of the Casino Control Act and the regulations promulgated thereunder, to the extent applicable. Each Holder by accepting a Security or becoming the beneficial owner thereof shall for all purposes be deemed to agree and consent (a) to all of the terms and provisions of the Indenture and (b) that all Holders, whether initial holders or subsequent transferees, shall be subject to the qualification provisions of the Casino Control Act. As set forth more fully in the Indenture, in the event that the Casino Control Commission determines that a Holder is not qualified under the Casino Control Act, the Company shall have the absolute right and obligation to purchase from such Holder (the "Disqualified Holder") the Securities the Disqualified Holder may then possess, no later than forty-five days after the date that the Company serves notice on any Disqualified Holder of such determination. Immediately upon such determination, the Disqualified Holder shall have (i) no further right to exercise, directly or through any trustee or nominee, any right conferred by its Securities or (ii) no further right to receive any dividends, interest, or other distribution or payment with respect to any such Securities. In the event a Disqualified Holder fails to so sell its Securities within 30 days after the determination by the Casino Control Commission, the Company shall purchase such Securities within 15 days after the end of such 30 day period (A) at the lowest of (1) the principal amount thereof; (2) the amount which the Disqualified Holder paid for the Securities, together with accrued interest up to the date of the determination of disqualification; or (3) the market value of such Securities or (B) in lieu of a purchase pursuant to clause (A), at the election of the Company if the same is consented to by the Requisite Lenders, in exchange for the number of shares of Applicable Common Stock that would apply to such Securities in the event of a Demand Payment. 24 In the case of any redemption of Securities in accordance with Article Eleven of the Indenture, interest that has accrued on or prior to the Redemption Date will be payable to the Holders of such Securities, or one or more Predecessor Securities, of record at the close of business on the relevant Record Date referred to on the face hereof. Securities (or portions thereof) for whose redemption and payment provision is made in accordance with the Indenture shall cease to bear interest from and after the Redemption Date. In the event of redemption of this Security in part only, a new Security or Securities for the unredeemed portion hereof shall be issued in the name of the Holder hereof upon the cancellation hereof. If an Event of Default shall occur and be continuing, the principal of all the Securities may be declared due and payable in the manner and with the effect provided in the Indenture. The Indenture contains provisions for defeasance at any time of (a) the entire indebtedness of the Company on this Security and (b) certain restrictive covenants and the related Defaults and Events of Default, upon compliance by the Company with certain conditions set forth therein, which provisions apply to this Security. Any Lien that may from time to time secure the Securities is subject to subordination or termination. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the Guarantor and the rights of the Holders under the Indenture at any time by the Company, the Guarantor and the Trustee with the consent of the Holders of a majority in aggregate principal amount of the Securities at the time Outstanding. The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount of the Securities at the time Outstanding, on behalf of the Holders of all the Securities, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such amendment, modification, consent or waiver by or on behalf of the Holder of this Security, or otherwise in accordance with the terms of the Indenture, shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange here for or in lieu hereof whether or not notation thereof is made upon this Security. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registerable on the Security Register of the Company, upon surrender of this Security for registration of transfer at the office or agency of the Company maintained for such purpose in The City of New York, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities, of authorized denominations and for the same aggregate principal amounts will be issued to the designated transferee or transferees. The Securities are issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof; provided however that, in the case of the original issuance of the Securities, the Company may issue Securities in denominations of $10 or integral multiples thereof. As provided in the Indenture and subject to certain limitations therein set forth, the Securities are exchangeable for a like aggregate principal amount of Securities of a different authorized denomination, as requested by the Holder surrendering the same. 25 No service charge shall be made for any registration of transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. The Securities are entitled to the benefit of the Guarantee by the Guarantor to the extent provided in the Guarantee. Subject to the provisions of the Indenture, the Requisite Lenders may elect, upon delivery of notice to the Trustee, at their sole discretion, at any time after the original issuance of any Notes through the close of business on the final maturity date of the Notes, to cause all (but not less than all) outstanding Notes to be convertible at the option of the Holder, in whole or in part, into that number of shares of Company Common Stock (as such shares shall be constituted at the date of conversion) obtained by multiplying the principal amount of this Note by the Stated Ratio in effect at such time, by surrender of the Note so to be converted, together with any required funds as provided in Section 1502 of the Indenture. All fractions will be rounded down to the nearest whole number of shares, and no fractional shares will be issued upon any conversion or Demand Payment referred to above and no payment will be made in respect of any fraction of a share which would otherwise be issuable upon the surrender of any Note or Notes for conversion or payment in shares upon a Demand Payment. Prior to the time of due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any agent shall be affected by notice to the contrary. All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture. The Guarantor (which term includes any successor Person under the Indenture) has unconditionally guaranteed, to the extent set forth in the Indenture and subject to the provisions in the Indenture, (a) the due and punctual payment of the principal of and interest on the Securities, whether at maturity, by acceleration or otherwise, the due and punctual payment of interest on overdue principal, and, to the extent permitted by law, interest, and the due and punctual performance of all other obligations of the Company to the Holders or the Trustee all in accordance with the terms set forth in the Indenture and (b) in case of any extension of time of payment or renewal of any Securities or any of such other obligations, that the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at Stated Maturity, by acceleration or otherwise. 26 The obligations of the Guarantor to the Holders of Securities and to the Trustee pursuant to the Guarantee and the Indenture are expressly set forth in the Indenture and reference is hereby made to the Indenture for the precise terms of the Guarantee. Guarantor: ACE GAMING, LLC By:_______________________________________ SECTION 204. Form of Trustee's Certificate of Authentication. The Trustee's certificate of authentication shall be in substantially the following form: TRUSTEE'S CERTIFICATE OF AUTHENTICATION. This is one of the Securities referred to in the within-mentioned Indenture. WELLS FARGO BANK, NATIONAL ASSOCIATION,AS TRUSTEE By:_______________________________________ Authorized Officer 27 ARTICLE THREE THE SECURITIES SECTION 301. Title and Terms. (a) The aggregate principal amount of securities which may be authenticated and delivered under this Indenture is limited to $66,258,970, except for securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other securities. (b) The Notes shall be known and designated as the "3% Notes Due 2008" of the Company. Their Stated Maturity shall be July 22, 2008, and they shall accrue interest (which shall be payable only at the Stated Maturity of the Notes) at the rate of 3% per annum from July 22, 2004 accruing and compounding on each July 22 thereafter, until the principal thereof is paid or duly provided for. (c) The principal of (and premium, if any, on) and interest on the Securities shall be payable at the office or agency of the Company maintained for such purpose in The City of New York, or at such other office or agency of the Company as may be maintained for such purpose; provided, however, that, at the option of the Company, interest may be paid by check mailed to addresses of the Persons entitled thereto as such addresses shall appear on the Security Register. (d) The Securities shall be redeemable as provided in Article Eleven. (e) The Securities shall be payable or convertible into Company Common Stock as provided in Article Fifteen. (f) At any time after the Issue Date, the Requisite Lenders shall be entitled (in their sole and absolute discretion) to demand payment (a "Demand Payment") of all of the Notes by delivering a notice (a "Demand Payment Notice") to the Company demanding payment pursuant to this Section 301(f). Upon receipt of a Demand Payment Notice, the Notes shall thereafter be satisfied (and such Notes thereby extinguished) through the delivery by the Company to the Holder thereof of such number of shares of Company Common Stock (as such shares shall be constituted at the date of such payment) obtained by multiplying the principal amount of each Note by the Stated Ratio in effect at such time, plus any other securities or property that would be required to be issued in respect of such Note, as contemplated in Article Fifteen, in the case of Demand Payment (collectively, the "Applicable Common Stock"). All fractions will be rounded down to the nearest whole number of shares, and no fractional shares will be issued upon any Demand Payment and no payment will be made in respect of any fraction of a share which would otherwise be issuable upon the surrender of any Note or Notes in connection therewith. On the Demand Payment Date the Notes shall for all purposes cease to be (and shall be deemed to cease to be) outstanding and shall be discharged and all principal and accrued interest thereon extinguished and shall thereafter represent solely the right of the Holder to receive the Applicable Common Stock contemplated herein by surrender of such Notes in the manner provided in Article Fifteen hereof. (g) If the Company is served with notice of the disqualification of any Holder under Section 105(d) of the Casino Control Act by the Casino Control Commission, such Holder will be prohibited under Section 105(e) of the Casino Control Act from (i) receiving interest on the 28 Securities held by such Holder; (ii) exercising, directly or through any trustee or nominee, any right conferred on such Securities; and (iii) receiving any remuneration in any form from any Person licensed or qualified by the Casino Control Commission (including the Company, the Guarantor and the Trustee) for services rendered or otherwise. Notwithstanding the foregoing, the Trustee shall be entitled to exercise all rights with respect to the Securities held by such Holder including, but not limited to, accelerating the Securities (any monies or securities received by the Trustee on behalf of such Holder to be held in trust for such Holder pursuant to Section 605 hereof). If the Trustee exercises voting rights with respect to such Securities, such votes shall be cast in the same proportion as the votes of the other Outstanding Securities are cast on such issue. A copy of any notice served upon the Company as described above shall be promptly delivered by the Company to the Trustee. Any such notice to the Trustee shall be effective against the Trustee on the second Business Day after receipt thereof by a Responsible Officer of the Trustee. SECTION 302. Denominations. The Securities shall be issuable only in registered form without coupons and only in denominations of $1,000 and any integral multiple thereof; provided, however, that, in the case of the original issuance of Securities, the Company may issue Securities in denominations of $10 or integral multiples thereof. SECTION 303. Execution, Authentication, Delivery and Dating. The Securities shall be executed on behalf of the Company by its Chairman, its President, a Vice President, or the Chief Financial Officer. The signature of any officer on the Securities may be manual or facsimile signatures of the present or any future such authorized officer and may be imprinted or otherwise reproduced on the Securities. Securities bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities. At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities, and the Trustee in accordance with such Company Order shall authenticate and deliver such Securities. Each Security shall be dated the date of its authentication. No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Security a certificate of authentication substantially in the form provided for herein duly executed by the Trustee by manual signature of an authorized officer, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder and is entitled to the benefits of this Indenture. In case the Company, pursuant to Article Eight, shall be consolidated or merged with or into any other Person or shall convey, transfer, lease or otherwise dispose of its properties and assets substantially as an entirety to any Person, and the successor Person resulting from such 29 consolidation, or surviving such merger, or into which the Company shall have been merged, or the Person which shall have received a conveyance, transfer, lease or other disposition as aforesaid, shall have executed an indenture supplemental hereto with the Trustee pursuant to Article Eight, any of the Securities authenticated or delivered prior to such consolidation, merger, conveyance, transfer, lease or other disposition may, from time to time, at the request of the successor Person, be exchanged for other Securities executed in the name of the successor Person with such changes in phraseology and form as may be appropriate, but otherwise in substance of like tenor as the Securities surrendered for such exchange and of like principal amount; and the Trustee, upon Company Request of the successor Person, shall authenticate and deliver Securities as specified in such request for the purpose of such exchange. If Securities shall at any time be authenticated and delivered in any new name of a successor Person pursuant to this Section in exchange or substitution for or upon registration of transfer of any Securities, such successor Person, at the option of the Holders but without expense to them, shall provide for the exchange of all Securities at the time Outstanding for Securities authenticated and delivered in such new name. SECTION 304. Temporary Securities. Pending the preparation of definitive Securities, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Securities which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as conclusively evidenced by their execution of such Securities. If temporary Securities are issued, the Company will cause definitive Securities to be prepared without unreasonable delay. After the preparation of definitive Securities, the temporary Securities shall be exchangeable for definitive Securities upon surrender of the temporary Securities at the office or agency of the Company designated for such purpose pursuant to Section 1002, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a like principal amount of definitive Securities of authorized denominations. Until so exchanged, the temporary Securities shall in all respects be entitled to the same benefits under this Indenture as definitive Securities. SECTION 305. Registration, Registration of Transfer and Exchange. The Company shall cause to be kept at the Corporate Trust Office of the Trustee a register (the register maintained in such office and in any other office or agency designated pursuant to Section 1002 being herein sometimes referred to as the "Security Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Securities and of transfers of Securities. The Security Register shall be in written form or any other form capable of being converted into written form within a reasonable time. At all reasonable times, the Security Register shall be open to inspection by the Trustee. The Trustee is hereby initially appointed as security registrar (the "Security Registrar") for the purpose of registering Securities and transfers of Securities as herein provided. 30 Upon surrender for registration of transfer of any Security at the office or agency of the Company designated pursuant to Section 1002, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities of any authorized denomination or denominations of a like aggregate principal amount and like terms. At the option of the Holder, Securities may be exchanged for other Securities of any authorized denomination and of a like aggregate principal amount and like terms, upon surrender of the Securities to be exchanged at such office or agency. Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Securities which the Holder making the exchange is entitled to receive. All Securities issued upon any registration of transfer or exchange of Securities shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such registration of transfer or exchange. Every Security presented or surrendered for registration of transfer or for exchange shall (if so required by the Company or the Security Registrar) be duly endorsed, or be accompanied by a written instrument of transfer, in form satisfactory to the Company and the Security Registrar, duly executed by the Holder thereof or his attorney duly authorized in writing. No service charge shall be made for any registration of transfer or exchange or redemption of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Securities, other than exchanges not involving any transfer. The Company shall not be required (a) to issue, register the transfer of or exchange any Security during a period beginning at the opening of business 15 days before the selection of Securities to be redeemed under Section 1104 and ending at the close of business on the day of such mailing of the relevant notice of redemption; (b) to register the transfer of or exchange any Security so selected for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part; or (c) to register a transfer of any Security surrendered for conversion or in respect of any Demand Payment pursuant to Article Fifteen. SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities. If (a) any mutilated Security is surrendered to the Trustee or (b) the Company and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Security, and there is delivered to the Company and the Trustee such security or indemnity as may be required by them to save each of them harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute and upon Company Order the Trustee shall authenticate and deliver, in exchange for any such mutilated Security or in lieu of any such destroyed, lost or stolen Security, a new Security of like tenor and principal amount, bearing a number not contemporaneously outstanding. In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security. 31 Upon the issuance of any new Security under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. Every new Security issued pursuant to this Section in lieu of any destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all benefits of this Indenture equally and proportionately with any and all other Securities duly issued hereunder. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities. SECTION 307. Payment of Interest; Interest Rights Preserved. Interest on any Security shall be paid to the Person in whose name such Security (or one or more Predecessor Securities) is registered at the close of business on the Stated Maturity Date at the office or agency of the Company maintained for such purpose pursuant to Section 1002. SECTION 308. Persons Deemed Owners. Prior to the due presentment of a Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name such Security is registered as the owner of such Security for the purpose of receiving payment of principal of (and premium, if any, on) and (subject to Sections 305 and 307) interest on such Security and for all other purposes whatsoever, whether or not such Security be overdue, and none of the Company, the Trustee or any agent of the Company or the Trustee shall be affected by notice to the contrary. SECTION 309. Cancellation. All Securities surrendered for payment, redemption, conversion, registration of transfer or exchange shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee and shall be promptly cancelled by it. The Company may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and may deliver to the Trustee (or to any other Person for delivery to the Trustee) for cancellation any Securities previously authenticated hereunder which the Company has not issued and sold, and all Securities so delivered shall be promptly cancelled by the Trustee. If the Company shall so acquire any of the Securities, however, such acquisition shall not operate as a redemption or satisfaction of the indebtedness represented by such Securities unless and until the same are surrendered to the Trustee for cancellation. No Securities shall be authenticated in lieu of or in exchange for any Securities cancelled as provided in this Section, except as expressly permitted by this Indenture. All cancelled Securities held by the Trustee shall be disposed of by the Trustee in accordance with its customary procedures and certification of their disposal delivered to the Company. 32 SECTION 310. Computation of Interest. Interest on the Securities shall be computed on the basis of a 360-day year of twelve 30-day months. SECTION 311. Maximum Interest Rate. Regardless of any provision contained herein, in the Securities or in any of the Security Documents, the Holders shall not be entitled to receive, collect or apply as interest (whether termed interest in the documents or deemed to be interest by judicial determination or operation of law) on the Securities, any amount in excess of the maximum amount allowed by applicable law, and, if any Holder ever receives, collects or applies as interest any such excess, the amount that would be excessive interest shall be deemed to be a partial prepayment of principal and treated hereunder as such; and, if the principal amount of the Securities is paid in full, any remaining excess shall forthwith be paid to the Company. In determining whether or not the interest paid or payable under any specific contingency exceeds the maximum amount of interest allowed by applicable law, the Company and the Holders shall, to the maximum extent permitted under applicable law, (a) characterize any nonprincipal payment as an expense fee, or premium rather than interest; (b) exclude voluntary prepayments and the effects thereof; and (c) amortize, prorate, allocate and spread, in equal parts, the total amount of interest throughout the entire contemplated term of the Securities. ARTICLE FOUR SATISFACTION AND DISCHARGE SECTION 401. Satisfaction and Discharge of Indenture. This Indenture shall upon Company Request cease to be of further effect (except as to surviving rights of registration of transfer or exchange of Securities herein expressly provided for) and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture and releasing all liens and security interests in the Collateral when (i) either (A) all Securities theretofore authenticated and delivered (other than (1) Securities which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 306, (2) Securities for whose payment money has theretofore been deposited in trust with the Trustee or any Paying Agent or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 1003 and (3) securities that have been duly delivered to the Trustee for conversion or payment pursuant to Article Fifteen hereof) have been delivered to the Trustee for cancellation; or (B) all such Securities not theretofore delivered to the Trustee for cancellation (1) have become due and payable as the result of a Demand Payment, or (2) have become due and payable at their Stated Maturity, or 33 (3) are to be called for redemption (with the consent of the Requisite Lenders having been obtained) within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company, and the Company, in the case of (1), (2) or (3) above, has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust for the purpose an amount (including any shares of Company Common Stock) sufficient to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for principal (and premium, if any) and interest to the date of such deposit (in the case of Securities which have become due and payable) or to the Stated Maturity or Redemption Date, or to satisfy the rights of holders of Securities under this Indenture to obtain Applicable Common Stock in respect of any Demand Payment; (ii) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and (iii) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for in this Section 401 relating to the satisfaction and discharge of this Indenture have been complied with. Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 606 and, if money shall have been deposited with the Trustee pursuant to subclause (B) of clause (i) of this Section, the obligations of the Trustee under Section 402 and the last paragraph of Section 1003, shall survive. SECTION 402. Application of Trust Money. Subject to the provisions of the last paragraph of Section 1003, all money and property deposited with the Trustee pursuant to Section 401 shall be held in trust and, at the direction of the Company, be invested prior to Maturity in United States Government Obligations, and applied by it, in accordance with the provisions of the Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium, if any) and interest for whose payment such money has been deposited with the Trustee; but such money need not be segregated from other funds except to the extent required by law. Any funds remaining following payment of all Securities and all other obligations of the Company hereunder shall be the property of the Company. ARTICLE FIVE REMEDIES SECTION 501. Events of Default. "Event of Default," wherever used herein, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): 34 (i) default in the payment of any principal of (or premium, if any, on) any Security, or interest thereon, at its Maturity; or (ii) default in the performance, or breach, of any covenant or warranty of the Company or any of its Subsidiaries in this Indenture or of the Company or Guarantor in the Security Documents (other than a default in the performance, or breach, of a covenant or warranty which is specifically dealt with elsewhere in this Section), and continuance of such default or breach for a period of 60 days after there has been given, by registered or certified mail, to the Company and the Guarantor by the Trustee or to the Company and the Guarantor and the Trustee by the Requisite Lenders a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder, unless the Company or any of its Subsidiaries is proceeding, and continues to proceed, diligently to cure any such default; or (iii) (A) there shall have occurred one or more defaults by the Company or any of its Subsidiaries in the payment of the principal of or premium, if any, on Indebtedness aggregating $5 million or more, when the same becomes due and payable at the stated maturity thereof, and such default or defaults shall have continued after any applicable grace period and shall not have been cured or waived or (B) in accordance with the terms of an agreement or instrument binding upon the Company or any of its Subsidiaries, Indebtedness of the Company or any of its Subsidiaries aggregating $5 million or more shall have been accelerated or otherwise declared due and payable, or required to be prepaid or repurchased (other than by regularly scheduled required prepayment), prior to the stated maturity thereof; or (iv) any Person entitled to take the actions described in this Section 501(iv), after the occurrence of any event of default under any agreement or instrument evidencing any Indebtedness in excess of $5 million in the aggregate of the Company or any of its Subsidiaries, shall notify the Trustee of the intended sale or disposition of any assets of the Company or any of its Subsidiaries that have been pledged to or for the benefit of such Person to secure such Indebtedness or shall commence proceedings, or take any action (including by way of set-off) to retain in satisfaction of any Indebtedness, or to collect on, seize, dispose of or apply, any such assets of the Company or any of its Subsidiaries (including funds on deposit or held pursuant to lock-box and other similar arrangements), pursuant to the terms of any agreement or instrument evidencing any such Indebtedness of the Company or any of its Subsidiaries or in accordance with applicable law; or (v) final judgments or orders rendered against the Company or any of its Subsidiaries which require the payment in money, either individually or in an aggregate amount, that is more than $10 million and (A) an enforcement proceeding shall have been commenced by any creditor upon such judgment or order and (B) there shall have been a period of 60 consecutive days during which a stay of enforcement of such judgment or order, by reason of pending appea1 or otherwise, was not in effect; or (vi) the entry of a decree or order by a court having jurisdiction in the premises adjudging the Company or any of its Subsidiaries a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition or in respect of the Company or any such Subsidiary under the Federal Bankruptcy Code or 35 any other applicable federal or state law, or appointing a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Company or any such Subsidiary or of any substantial part of their respective property, or ordering the winding up or liquidation of their respective affairs, and the continuance of any such decree or order unstayed and in effect for a period of 90 consecutive days; or (vii) the institution by the Company or any of its Subsidiaries of proceedings to be adjudicated a bankrupt or insolvent, or the consent by it to the institution of bankruptcy or insolvency proceedings against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under the Federal Bankruptcy Code or any other applicable federal or state law or the consent by it to the filing of any such petition or to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Company or any such Subsidiary or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due; or (viii) any of the Security Documents ceases to be in full force and effect in any material respect or any of the Security Documents ceases to create in favor of the Trustee, with respect to any material amount of Collateral, a valid and perfected first priority Lien on the Collateral purported to be covered thereby, except for any cessation, release or subordination contemplated or permitted (or resulting from any act contemplated or permitted) by Section 1405 or as may be otherwise contemplated by this Indenture; or (ix) the cessation of substantially all gaming operations at The Sands for more than 60 consecutive days, except as a result of an Event of Loss; or (x) the loss by Guarantor or its successor or assigns of its legal right to own or operate The Sands and such loss continues for more than 60 consecutive days. SECTION 502. Acceleration of Maturity; Rescission and Annulment. If an Event of Default (other than an Event of Default specified in Section 501(6) or 501(7)) occurs and is continuing, then and in every such case, the Trustee and the Requisite Lenders, may declare the principal amount of all the Securities to be due and payable immediately, by a notice in writing to the Company and the Guarantor, and upon any such declaration such principal amount shall become immediately due and payable. If an Event of Default specified in Section 501(6) or 501(7) occurs and is continuing, then the principal amount of all the Securities shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee and any Holder. 36 At any time after a declaration of acceleration has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article provided, the Requisite Lenders, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if (i) the Company has paid or deposited with the Trustee a sum sufficient to pay, (A) all unpaid principal of (and premium, if any, on) any Outstanding Securities which has become due otherwise than by such declaration of acceleration, and interest on such unpaid principal at the rate borne by the Securities, and (B) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel; and (ii) all Events of Default, other than the non-payment of amounts of principal of (or premium, if any, on) or interest on Securities which have become due solely by such declaration of acceleration, have been cured or waived as provided in Section 513. No such rescission shall affect any subsequent default or impair any right consequent thereon. Notwithstanding the preceding paragraph, in the event of a declaration of acceleration in respect of the Securities because of an Event of Default specified in Section 501(3) shall have occurred and be continuing, such declaration of acceleration shall be automatically annulled if the Indebtedness that is the subject of such Event of Default has been discharged or the holders thereof have rescinded their declaration of acceleration in respect of such Indebtedness or the same has been waived or stayed, and written notice of such discharge, rescission, waiver or stay, as the case may be, shall have been given to the Trustee by the Company and countersigned by the holders of such Indebtedness or a trustee, fiduciary or agent for such holders, within 30 days after such declaration of acceleration in respect of the Securities, and no other Event of Default has occurred during such 30-day period which has not been cured or waived during such period. SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee. The Company covenants that if (i) default is made in the payment of any installment of interest on any Security when such interest becomes due and payable and such default continues for a period of 30 days, or (ii) default is made in the payment of the principal of (or premium, if any, on) any Security at the Maturity thereof, the Company will, upon demand of the Trustee, pay to the Trustee for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities for principal (and premium, if any) and interest, and interest on any overdue principal (and premium, if any), and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. 37 If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Company or any other obligor upon the Securities and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon the Securities, wherever situated. If an Event of Default occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in any Security Document or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. SECTION 504. Trustee May File Proofs of Claim. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company, the Guarantor or any other obligor upon the Securities or the property of the Company, the Guarantor or of such other obligor or their creditors, the Trustee (irrespective of whether the principal of the Securities shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of overdue principal, premium, if any, or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise, (i) to file and prove a claim for the whole amount of principal (and premium, if any) and interest owing and unpaid in respect of the Securities and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and of the Holders allowed in such judicial proceeding, and (ii) to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 606. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. 38 SECTION 505. Trustee May Enforce Claims Without Possession of Securities. All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name and as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the holders of the Securities in respect of which such judgment has been recovered. SECTION 506. Application of Money Collected. Any money and property collected by the Trustee pursuant to this Article or in connection with the exercise of remedies under any Security Document shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal (or premium, if any) or interest, upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: FIRST: To the payment of all amounts due the Trustee under Section 606; SECOND: To the payment of the amounts then due and unpaid for principal of (and premium, if any, on,) and interest on the Securities in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Securities for principal (and premium, if any) and interest, respectively; and THIRD: The balance, if any, to the Person or Persons entitled thereto. SECTION 507. Limitation on Suits. No Holder of any Securities shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless: (i) the Requisite Lenders shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder; (ii) such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; (iii) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and (iv) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority or more in principal amount of the Outstanding Securities; it being understood and intended that no one or more Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Section 507 to affect, disturb or prejudice the rights of any other Holders, or to obtain or to seek to obtain priority or preference 39 over any other Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all the Holders. SECTION 508. Unconditional Right of Holders to Receive Principal Premium and Interest. The Holder of any of the Securities shall have the right, which is absolute and unconditional, to receive payment, as provided herein (including, if applicable, Article Thirteen) and in the terms of each note representing such Securities of the principal of (and premium, if any, on) and interest on, such Securities on the respective Stated Maturities expressed in such Securities (or, in the case of redemption, on the Redemption Date) and to institute suit for the enforcement of any such payment, and such rights shall not be impaired without the consent of such Holder; provided, however, that by a Holder's acquisition of any of the Securities, such Holder or the beneficial owner thereof shall be deemed to have consented to each and every provision of the Indenture including, without limitation, the provisions of Sections 301, 1405 and Articles Two, Thirteen and Fifteen hereof. SECTION 509. Restoration of Rights and Remedies. If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture or any Security Document and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Company, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted. SECTION 510. Rights and Remedies Cumulative. Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities in the last paragraph of Section 306, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. SECTION 511. Delay or Omission Not Waiver. No delay or omission of the Trustee or of any Holder of any Security to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or any Security Document or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be. 40 SECTION 512. Control by Holders. Notwithstanding anything to the contrary set forth in Section 316(a) of the TIA (the provisions of which are hereby excluded), the Requisite Lenders shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee under this Indenture or the Security Documents, provided that (i) such direction shall not be in conflict with any rule of law or with this Indenture; (ii) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction; and (iii) the Trustee need not take any action which might involve it in personal liability unless it has obtained appropriate indemnity. SECTION 513. Waiver of Defaults and Compliance. Notwithstanding anything to the contrary set forth in Section 316(a) of the TIA (the provisions of which are hereby excluded) the Requisite Lenders may on behalf of the Holders of all the Securities: (i) waive any past default hereunder and its consequences, except a default in respect of the payment of the principal of (or premium, if any, on) or interest on any Security, and upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured and released, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon; and (ii) waive future compliance with any term, provision or condition of this Indenture or the Security Documents or any related instruments, agreements or documents (but no such waiver shall extend to or affect such term, provision or condition except to the extent so expressly waived), in which event the Company and the Guarantor may omit to comply with any such term, provision or condition of this Indenture, the Security Documents or any related instrument, agreement or document. The provisions of this Section 513 and Section 512 hereof apply to all provisions of this Indenture and the Security Documents and the fact that various provisions of this Indenture and the Security Documents may include specific reference to the consent or other approval or agreement of or by the Requisite Lenders shall not, for any purpose, be deemed to limit the application of Section 512 or this Section 513. SECTION 514. Security Agreements. Immediately following the execution of this Indenture, the Holders authorize and consent to the Trustee executing the Security Agreements and all other documents necessary to effectuate either the Security Agreements or this Indenture. 41 ARTICLE SIX THE TRUSTEE SECTION 601. Notice of Defaults. Within the earlier of 90 days after the occurrence of any Default hereunder or as soon as practicable after any such Default becomes to known to the Trustee, the Trustee shall transmit in the manner and to the extent provided in TIA Section 313(c), notice of such Default hereunder known to the Trustee, unless such Default shall have been cured or waived; provided, however, that, except in the case of a Default in the payment of the principal of (or premium, if any, on) or interest on any Security, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Trustee in good faith determines that the withholding of such notice is in the interest of the Holders; and provided further that in the case of any Default of the character specified in Section 501(4) no such notice to Holders shall be given until at least 30 days after the occurrence thereof. The Trustee shall not be deemed to have knowledge of any Default or Event of Default hereunder unless a Responsible Officer in its Corporate Trust Department shall have actual knowledge thereof. SECTION 602. Certain Rights of Trustee. Subject to the provisions of TIA Sections 315(a) through 315(d): (i) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (ii) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution; (iii) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate; (iv) the Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (v) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; 42 (vi) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney; (vii) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; (viii) the Trustee shall not be liable for any action taken, suffered or omitted by it in good faith and believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture; and (ix) the Trustee shall not be personally liable, in case of entry by it upon any property subject to the liens of the Security Documents, for debts contracted or liabilities or damages incurred in the management or operation thereof. The Trustee shall not be required to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. The Trustee and its directors, officers, employees and Affiliates shall cooperate with the Casino Control Commission and the Division of Gaming Enforcement and provide such information and documentation as may from time to time be requested by such agencies. The Trustee may rely on, and shall be protected with respect to any action taken or omitted to be taken in good faith in accordance with, the direction of the Requisite Lenders. SECTION 603. Trustee Not Responsible for Recitals or Issuance of Securities. The recitals contained herein and in the Securities, except for the Trustee's certificates of authentication, shall be taken as the statements of the Company, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities, except that the Trustee represents that it is duly authorized to execute and deliver this Indenture, authenticate the Securities and perform its obligations hereunder and that the statements made by it in a Statement of Eligibility and Qualification of Form T-1 supplied to the Company are true and accurate, subject to the qualifications set forth therein. The Trustee shall not be accountable for the use or application by the Company of Securities or the proceeds thereof. The Trustee makes no representations with respect to the effectiveness or adequacy of any Security Document, or the validity, perfection or priority, if any, of liens granted to it under this Indenture or the Security Documents. The Trustee shall not be responsible for ascertaining or maintaining such validity, perfection or priority, if any, and shall be fully protected in relying 43 upon certificates and opinions delivered to it in accordance with the terms of this Indenture or the Security Documents. SECTION 604. May Hold Securities. The Trustee, any Paying Agent, any Security Registrar or any other agent of the Company or of the Trustee, in its individual or any other capacity, may become the owner or pledgee of Securities and, subject to TIA Sections 310(b) and 311, may otherwise deal with the Company with the same rights it would have if it were not Trustee, Paying Agent, Security Registrar or such other agent. SECTION 605. Money Held in Trust. Except as otherwise provided herein, money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise provided herein or agreed with the Company. SECTION 606. Compensation and Reimbursement. The Company agrees: (i) to pay to the Trustee from time to time such compensation as the Company and the Trustee shall from time to time agree for all services rendered by it hereunder and under the Security Documents (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); and (ii) except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture and under the Security Documents (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or bad faith; and (iii) to indemnify the Trustee for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of this trust and under the Security Documents, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder or thereunder. The obligations of the Company under this Section to compensate the Trustee, to pay or reimburse the Trustee for expenses, disbursements and advances and to indemnify and hold harmless the Trustee shall constitute additional indebtedness hereunder and shall survive the satisfaction and discharge of this Indenture. As security for the performance of such obligations of the Company, the Trustee shall have a claim prior to the Securities upon all property and funds held or collected by the Trustee as such, except funds held in trust for the payment of principal of (and premium, if any, on) or interest on particular Securities. 44 SECTION 607. Corporate Trustee Required; Eligibility. There shall at all times be a Trustee hereunder which shall be eligible to act as Trustee under TIA Section 310(a) and shall have a combined capital and surplus of at least $50,000,000. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of federal, state, territorial or District of Columbia supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. SECTION 608. Resignation and Removal; Appointment of Successor. (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section 609. (b) Subject to the provisions of the Casino Control Act, the Trustee may resign at any time by giving written notice thereof to the Company, the Casino Control Commission and the Division of Gaming Enforcement. If the instrument of acceptance by a successor Trustee required by Section 609 shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee. (c) Subject to the provisions of the Casino Control Act, the Trustee may be removed at any time by Act of the Requisite Lenders, delivered to the Trustee and to the Company. (d) If at any time: (i) the Trustee shall fail to comply with the provisions of TIA Section 310(b) after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Security for at least six months, or (ii) the Trustee shall cease to be eligible under Section 607 and shall fail to resign after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Security for at least six months, or (iii) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, subject to the provisions of the Casino Control Act, (A) the Company, by a Board Resolution, may remove the Trustee or (B) subject to TIA Section 315(e), any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. (e) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, the Company, by a Board Resolution, 45 shall promptly appoint a successor Trustee. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee shall be appointed by Act of the Requisite Lenders delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment, become the successor Trustee and supersede the successor Trustee appointed by the Company. If no successor Trustee shall have been so appointed by the Company or the Holders and accepted appointment in the manner hereinafter provided, any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee. Notwithstanding the foregoing, any successor Trustee may be appointed only with the prior, express approval of the Casino Control Commission, in consultation with the Division of Gaming Enforcement, provided that such successor Trustee must first be qualified as a financial source by and cooperate with the Casino Control Commission and the Division of Gaming Enforcement. (f) The Company shall give notice of each resignation and each removal of the Trustee and each appointment of a successor Trustee to the Holders of Securities in the manner provided for in Section 106. Each notice shall include the name of the successor Trustee and the address of its Corporate Trust Office. SECTION 609. Acceptance of Appointment by Successor. Every successor Trustee appointed hereunder shall take all necessary steps to be approved by the Casino Control Commission and shall execute, acknowledge and deliver to the Company, to the Guarantor and to the retiring Trustee an instrument accepting such appointment, and the successor Trustee, the Company and the Guarantor shall enter into a supplemental indenture evidencing the appointment of the successor Trustee and, as required, any amendment or modification to any Security Document or any additional Security Document. Thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder. Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts. No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article. SECTION 610. Merger, Conversion, Consolidation or Succession to Business. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any 46 successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such Securities; and in case at that time any of the Securities shall not have been authenticated, any successor Trustee may authenticate such Securities either in the name of any predecessor hereunder or in the name of the successor Trustee; and in all such cases such certificates shall have the full force which it is anywhere in the Securities or in this Indenture provided that the certificate of authentication of any predecessor Trustee or to authenticate Securities in the name of any predecessor Trustee shall apply only to its successor or successors by merger, conversion or consolidation. ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE, COMPANY AND GUARANTOR SECTION 701. Disclosure of Names and Addresses of Holders. Every Holder of Securities, by receiving and holding the same, agrees with the Company and the Trustee that none of the Company or the Trustee or any agent of either of them shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the Holders in accordance with TIA Section 312, regardless of the source from which such information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under TIA Section 312(b). SECTION 702. Reports by Trustee. (a) Within 60 days after May 15 of each year commencing with the first May 15 after the first issuance of Securities, the Trustee shall transmit to the Holders, in the manner and to the extent provided in TIA Section 313(c), a brief report dated as of such May 15 if required by TIA Section 313(a). The Trustee shall transmit to the Holders, within the times hereinafter specified a brief report with respect to the following: (i) the release, or release and substitution, of property subject to any Lien of this Indenture (and the consideration therefor, if any) unless the fair value of such property, as set forth in the Officers' Certificate or Opinion of Counsel required by TIA Section 314(d), is less than 10 per centum of the aggregate principal amount of the Securities Outstanding at the time of such release, or such release and substitution, such report to be so transmitted within 90 days after such time; and (ii) the character and amount of any advances made by it as such since the date of the last report transmitted pursuant to the provisions of TIA Section 313(a) (or if no such report has yet been so transmitted, since the date of execution of the Indenture), for the reimbursement of which it claims or may claim a Lien or charge, prior to that of the Indenture Securities, on the trust estate or on property or funds held or collected by it as such Trustee, and which it has not previously reported pursuant to this clause (2), if such advances remaining unpaid at any time aggregate more than 10 per centum of the aggregate principal amount of the Securities Outstanding at such time, such report to be so transmitted within 90 days after such time. 47 To the extent required by applicable laws, rules and regulations, a copy of each such report shall, at the time of such transmission to the Holders, be filed with each stock exchange, if any, upon which the Securities are listed, and also with the Commission. (b) The Trustee shall transmit by mail to the Casino Control Commission and the Division of Gaming Enforcement (i) an initial list of the beneficial Holders of the Securities promptly after the issuance of the Securities, (ii) current lists of the Holders appearing in the Security Register on a twice-per-year basis, no later than March 1 and September 1 of each year, and (iii) upon request by the Casino Control Commission or the Division of Gaming Enforcement, such additional information with respect to the beneficial Holders of the Securities as the Trustee may obtain through its good faith efforts. (c) The Trustee shall notify the Casino Control Commission and the Division of Gaming Enforcement, simultaneously with any notice given to the Holders, of any default or acceleration under the Securities, this Indenture, the Security Documents, or any other documents, instrument, agreement, covenant, or condition related to the issuance of the Securities, whether declared or effectuated by the Trustee or the Holders. The Trustee shall notify the Casino Control Commission and the Division of Gaming Enforcement on a continuing basis and in writing, of any actions taken by the Trustee or the Holders with regard to such default, acceleration or similar matters related thereto. (d) The Trustee shall notify the Casino Control Commission and the Division of Gaming Enforcement of the removal or resignation of the Trustee promptly after such removal or resignation. (e) The Trustee shall provide to the Casino Control Commission and the Division of Gaming Enforcement, promptly after the execution by the Trustee of the same, copies of any and all amendments or modifications to this Indenture, the Securities, the Security Documents, or any other documents, instrument, agreement, covenant or condition related to the issuance of the Securities. SECTION 703. Reports by Company and Guarantor. The Company and the Guarantor shall, to the extent required by the TIA: (i) file with the Trustee, within 15 days after the Company or the Guarantor, as the case may be, is required to file the same with the Commission, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) which the Company may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934; or, if the Company or the Guarantor, as the case may be, is not required to file information, documents or reports pursuant to either of said Sections, then it shall file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such of the supplementary and periodic information, documents and reports which may be required pursuant to Section 13 of the Securities Exchange Act of 1934 in respect of a security listed and registered on a national securities exchange as may be prescribed from time to time in such rules and regulations; 48 (ii) file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such additional information, documents and reports with respect to compliance by the Company or the Guarantor, as the case may be, with the conditions and covenants of this Indenture as may be required from time to time by such rules and regulations; (iii) transmit by mail to all Holders, in the manner and to the extent provided in TIA Section 313(c), within 30 days after the filing thereof with the Trustee, such summaries of any information, documents and reports required to be filed by the Company or the Guarantor, as the case may be, pursuant to paragraphs (A) and (B) of this Section as may be required by rules and regulations prescribed from time to time by the Commission; and (iv) comply in all material respects with all requirements and provisions of the Casino Control Act and notify the Trustee by mail of all formal hearings and formal proceedings materially relating to the Company, the Guarantor or their respective successors, before the Casino Control Commission relating to the plenary casino licenses for the Casino, as the same are scheduled. Such notice shall be in writing and given at least seven days prior to the hearing to which such notice relates, unless a shorter notice is given to the Company in which event the Company shall notify the Trustee promptly upon receiving such definite information as shall be contained in such notice. The Company hereby agrees that the Trustee may, but shall have no obligation to, attend such hearings and other proceedings if permitted to do so by the Casino Control Commission. ARTICLE EIGHT CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE SECTION 801. Company and Subsidiaries May Consolidate, etc., Only on Certain Terms. - Neither the Company nor any of its Subsidiaries shall consolidate with or merge with or into or sell, assign, convey, lease or transfer all or substantially all of its properties and assets to any Person or group of affiliated Persons in a single transaction or through a series of transactions, except that: (i) the Company or any of its Subsidiaries may consolidate with or merge with or into or sell, assign, convey, lease or transfer all or substantially all of its properties and assets (A) if consented to by the Requisite Lenders; and (B) the following requirements are complied with, unless otherwise consented to by the Requisite Lenders: (1) the Company or such Subsidiary shall be the continuing Person, or the resulting, surviving or transferee Person (the "surviving entity") shall be a Person organized and existing under the laws of the United States or any State thereof or the District of Columbia; (2) the surviving entity (other than an existing Guarantor) shall expressly assume, by a supplemental indenture executed and delivered to the Trustee, in form and substance reasonably satisfactory to the Trustee, all of the obligations of the Company or such Subsidiary, as applicable under the Securities, the Guarantee, this Indenture and the Security Documents, and the Company or the surviving entity shall have taken all steps necessary or desirable to perfect and protect the security interests granted or purported to be granted by the Security Documents 49 (including, without limitation, the priority thereof) in the applicable Collateral, including, without limitation, the execution, delivery, filing and recordation of additional mortgages, pledges, assignments and security agreements; (3) immediately before and immediately after giving effect to such transaction, or series of transactions (including, without limitation, any Indebtedness incurred or anticipated to be incurred in connection with or in respect of, such transaction or series of transactions), no Default or Event of Default shall have occurred and be continuing; (4) such transaction will not result in the loss, unless appropriately replaced, of any gaming or other license necessary for the continued operation of the Company or any Subsidiary as conducted immediately prior to such consolidation, merger, conveyance, transfer or lease; and (5) neither the Company nor any Subsidiary would thereupon become obligated with respect to any Indebtedness, nor any of its property subject to any Lien, unless the Company or such Subsidiary could incur such Indebtedness or create such Lien without violation of the terms of this Indenture; (ii) a Subsidiary may consolidate with or merge into or sell, assign, convey, lease or transfer all or substantially all of its properties and assets to or with the Company or any Subsidiary of the Company: (A) if consented to by the Requisite Lenders and (B) the following requirements are complied with, unless otherwise consented to by the Requisite Lenders: (1) the surviving entity (other than an existing Guarantor) shall expressly assume, by a supplemental indenture executed and delivered to the Trustee, in form and substance reasonably satisfactory to the Trustee, all of the obligations of such Subsidiary under the Securities, the Guarantee, this Indenture and the Security Documents, and such Subsidiary or surviving entity, as the case may be, shall have taken all steps necessary or desirable to perfect and protect the security interests granted or purported to be granted by the Security Documents (including, without limitation, the priority thereof), including, without limitation, the execution, delivery, filing and recordation of additional mortgages, pledges, assignments and security agreements; (2) such transaction will not impair the pledge of the stock of such Subsidiary granted or purported to be granted pursuant to the Security Documents; and (3) such transaction will not result in the loss (unless appropriately replaced) of any gaming or other license necessary for the continued operation of the Company and its Subsidiaries as conducted immediately prior to such sale, assignment, conveyance, transfer or lease; and (iii) the Company or such Person shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, sale, assignment conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture, comply with this Section 801. SECTION 802. Successor Substituted. Upon any consolidation of the Company or the Guarantor with or merger of the Company or any Guarantor with or into any other Person or any conveyance, transfer or lease of the properties and assets of the Company or the Guarantor substantially as an entirety to any Person in accordance with Section 801, unless otherwise consented to by the Requisite Lenders, the successor Person formed by such consolidation or into which the Company or the Guarantor is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company or the Guarantor under 50 this Indenture with the same effect as if such successor Person had been named as the Company or the Guarantor herein, and in the event of any such conveyance or transfer, the Company or the Guarantor (which term shall for this purpose mean the Person named as the "Company" or the "Guarantor," as the case may be, in the first paragraph of this Indenture or any successor Person which shall theretofore become such in the manner described in Section 801), except in the case of a lease, shall be discharged of all obligations and covenants under this Indenture and the Securities and may be dissolved and liquidated. ARTICLE NINE SUPPLEMENTAL INDENTURES SECTION 901. Supplemental Indentures and Amendments to Security Documents Without Consent of Holders. Without the consent of any Holders, the Company and the Guarantor, when each is authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto or amendment to any Security Document, in form satisfactory to the Trustee, for any of the following purposes: (i) to evidence the succession of another Person to the Company or the Guarantor and the assumption by any such successor of the covenants of the Company or the Guarantor, as the case may be, contained herein, in the Securities and in the Security Documents; or (ii) to add to the covenants of the Company or the Guarantor for the benefit of the Holders or to surrender any right or power herein conferred upon the Company or the Guarantor; or (iii) to add any additional Events of Default; or (iv) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee pursuant to the requirements of Section 609; or (v) to cure any ambiguity, to correct or supplement any provision herein or in the Security Documents which may be inconsistent with any other provision herein or in the Security Documents, or to make any other provisions with respect to matters or questions arising under this Indenture or under the Security Documents; provided that such action shall not adversely affect the interests of the Holders in any material respect; or (vi) to establish or maintain the Lien of this Indenture and the other Security Documents or to correct or amplify the description of any Collateral subject to the Lien of this Indenture or the other Security Documents, or to subject additional property to the Lien of this Indenture or other Security Documents; or (vii) to add any additional Guarantor; or (viii) to make any other change that does not adversely affect the rights of any Holder; or (ix) to secure the Securities. 51 SECTION 902. Supplemental Indentures and Amendments to Security Documents with Consent of Holders. Upon the request of the Company and the Guarantor, by a Board Resolution authorizing the execution thereof, together with the consent of the Requisite Lenders, by Act of said Holders delivered to the Trustee, the Trustee shall join the Company and the Guarantor in an indenture or indentures supplemental hereto or amendments to the Security Documents, for any purpose, including, without limitation, for the purpose of adding any provisions to or changing, modifying or amending in any manner or eliminating any of the provisions of this Indenture or the Security Documents or making additions to, changing, modifying, amending or eliminating in any manner the rights of the Holders hereunder or thereunder; provided, however, that no such supplemental indenture, or addition, change, amendment or modification to, or elimination of any provision of, any Security Document, shall, without the consent of the Holder of each Outstanding Security affected thereby: (i) change the Stated Maturity of the principal of, or any installment of interest on, any Security, or reduce the principal amount thereof or the rate of interest thereon or any premium payable upon the redemption thereof, or change the coin or currency in which any Security or any premium or the interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date), or (ii) reduce the percentage in principal amount of the Outstanding Securities, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences provided for in this Indenture, or (iii) modify any of the provisions of this Section or Section 513, except to increase any such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Outstanding Security affected thereby. It shall not be necessary for any Act of Holders under this Section to approve the particular form of any proposed supplemental indenture or amendments to the Security Documents, but it shall be sufficient if such Act shall approve the substance thereof. SECTION 903. Execution of Supplemental Indentures and Amendments to Security Documents. In executing, or accepting the additional trusts created by, any supplemental indenture or amendment to the Security Documents permitted by this Article or the modifications thereby of the trusts created by this Indenture or the Security Documents, the Trustee shall be entitled to receive, and shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture or amendment to the Security Documents is authorized or permitted by this Indenture and all conditions precedent herein provided for relating to such supplemental indenture have been complied with. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture or amendment to the Security Documents which 52 affects the Trustee's own rights, duties, or immunities under this Indenture or under the Security Documents or otherwise. SECTION 904. Effect of Supplemental Indentures. Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. SECTION 905. Conformity with Trust Indenture Act. Every supplemental indenture executed pursuant to the Article shall conform to the requirements of the Trust Indenture Act. SECTION 906. Reference in Securities to Supplemental Indentures. Securities authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities so modified as to conform, in the opinion of the Trustee and the Company, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Securities. SECTION 907. Notice of Supplemental Indentures and Amendments to Security Documents. Promptly after the execution by the Company, the Guarantor and the Trustee of any supplemental indenture or amendment to the Security Documents pursuant to the provisions of Section 902, the Company shall give notice thereof to the Holders of each Outstanding Security affected, in the manner provided for in Section 106, setting forth in general terms the substance of such supplemental indenture or amendment to the Security Documents. ARTICLE TEN COVENANTS SECTION 1001. Payment of Principal, Premium, if any, and Interest. The Company covenants and agrees for the benefit of the Holders that it will duly and punctually pay the principal of (and premium, if any, on) and interest on the Securities in accordance with, and subject to, the terms of the Securities and this Indenture. SECTION 1002. Maintenance of Office or Agency. The Company will maintain in The City of New York an office or agency where Securities may be presented or surrendered for payment, where Securities may be surrendered for registration of transfer, exchange, conversion or in respect of a Demand Payment and where notices and demands to or upon the Company in respect of the Securities and this Indenture may be served. The Corporate Trust Office of the Trustee shall be such office or agency of the 53 Company, unless the Company shall designate and maintain some other office or agency for one or more of such purposes. The Company will give prompt written notice to the Trustee of any change in the location of any such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands. The Company may also from time to time designate one or more other offices or agencies (in or outside of The City of New York) where the Securities may be presented or surrendered for any or all such purposes and may from time to time rescind any such designation; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in The City of New York for such purposes. The Company will give prompt written notice to the Trustee of any such designation or rescission and any change in the location of any such other office or agency. SECTION 1003. Money for Security Payments to Be Held in Trust. If the Company shall at any time act as its own Paying Agent, it will, on or before each due date of the principal of (and premium, if any, on) or interest on any of the Securities, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal (and premium, if any) or interest so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided and will promptly notify the Trustee of its action or failure so to act. Whenever the Company shall have one or more Paying Agents for the Securities, it will, on or before each due date of the principal of (and premium, if any, on), or interest on, any Securities, deposit with a Paying Agent a sum sufficient to pay the principal (and premium, if any) or interest so becoming due (or in the case of a Demand Payment, shall deposit the Applicable Common Stock), such sum (or securities) to be held in trust for the benefit of thePersons entitled to such principal, premium or interest, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of such action or any failure so to act. The Company will cause each Paying Agent (other than the Trustee) to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will: (i) hold all sums held by it for the payment of the principal of (and premium, if any on) or interest on Securities (or in the case of a Demand Payment, the Applicable Common Stock) in trust for the benefit of the Persons entitled thereto until such sums (or securities) shall be paid to such Persons or otherwise disposed of as herein provided; (ii) give the Trustee notice of any default by the Company (or any other obligor upon the Securities) in the making of any payment of principal (and premium, if any) or interest; and (iii) at any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums (or securities) so held in trust by such Paying Agent. 54 The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums (or securities) held in trust by the Company or such Paying Agent, such sums (or securities) to be held by the Trustee upon the same trusts as those upon which such sums (or securities) were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such sums. Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of (and premium, if any, on) or interest on any Security (or securities deposited as contemplated above) and remaining unclaimed for two years after such principal (and premium, if any) or interest has become due and payable (or in the case of a Demand Payment, two years after the Demand Payment Date) shall be paid to the Company on Company Request, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money (or securities), and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in the Borough of Manhattan, The City of New York, notice that such money (or securities) remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Company. SECTION 1004. Corporate Existence. Subject to Article Eight, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect the corporate existence, rights (charter and statutory) and franchises of the Company and each of its Subsidiaries; provided, however, that the Company shall not be required to preserve any such right or franchise if (a) the Board of Directors of the Company shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and its Subsidiaries as a whole and that the loss thereof is not disadvantageous in any material respect to the Holders and (b) the Company and its Subsidiaries shall have taken all steps necessary or desirable to protect or perfect the security interests granted or purported to be granted by the Security Documents, subject to and as permitted by the terms of this Indenture and the terms of any release or subordination contemplated in Section 1405 hereof, including, without limitation, the execution, delivery, filing and recordation of additional mortgages, pledges, assignments and security agreements. SECTION 1005. Payment of Taxes and Other Claims. The Company will pay or discharge or cause to be paid or discharged, before the same shall become delinquent and in accordance with applicable provisions of the Security Documents, (a) all taxes, assessments and governmental charges levied or imposed upon the Company or any of its Subsidiaries or upon the income, profits or property of the Company or any such Subsidiary and (b) all lawful claims for labor, materials and supplies, which, if unpaid, might by law become a lien upon the property of the Company or any such Subsidiary; provided, 55 however, that the Company shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings. SECTION 1006. Maintenance of Properties. Subject to and as permitted by the terms of this Indenture and the terms of any release or subordination contemplated by Section 1405 hereof, the Company will cause all properties owned by the Company or any of its Subsidiaries or used or held for use in the conduct of its business or the business of any Subsidiary to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as required by the Security Documents and as otherwise in the judgment of the Company may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided, however, that nothing in this Section shall prevent the Company from discontinuing the maintenance of any of such properties if such discontinuance is, in the judgment of the Company, desirable in the conduct of its business or the business of any such Subsidiary and not disadvantageous in any material respect to the Holders. SECTION 1007. Insurance. The Company will, and will cause its Subsidiaries to, maintain insurance with responsible and reputable insurance companies or associations in such amounts and covering such risks as is usually carried by companies engaged in similar businesses and owning similar properties in the same general areas in which the Company or such Subsidiary operates; provided that with respect to the Collateral the Company will, and will cause its Subsidiaries to, maintain insurance on the terms required by each of the Security Documents or, if the Lien contemplated therein is released or subordinated as contemplated and permitted in Section 1405, then in accordance with the requirements of the holder of any other lien on the Collateral. SECTION 1008. Statement by Officer as to Compliance. The Company and the Guarantor will deliver to the Trustee, within 120 days after the end of each fiscal year, a brief certificate, which may be in the form attached as Exhibit A, from the principal executive officer, principal financial officer or principal accounting officer as to his or her knowledge of the Company's or the Guarantor's compliance with all conditions and covenants under this Indenture or the Security Documents. For purposes of this Section 1008, such compliance shall be determined without regard to any period of grace or requirement of notice under this Indenture or the Security Documents. SECTION 1009. Statement by Officers of Certain Defaults. When any Default has occurred and is continuing under this Indenture, or if the trustee for or the holder of any other evidence of Indebtedness of the Company or any of its Subsidiaries gives any notice or takes any other action with respect to a claimed default (other than with respect to Indebtedness in the principal amount of less than $5 million), the Company shall deliver to the Trustee by registered or certified mail or by telegram, telex or facsimile transmission an Officers' Certificate specifying such event, notice or other action within five Business Days of its occurrence. 56 SECTION 1010. Assumption of Obligations upon Change of Control. Upon the occurrence of a Change of Control in accordance with the provisions of Section 801 of this Indenture, the Securities shall be assumable by the successor to the Company. SECTION 1011. Limitation on Company Indebtedness. Unless otherwise consented to by the Requisite Lenders, the Company shall not, directly or indirectly, create, incur, assume, suffer to exist, guarantee or in any manner become liable for the payment of ("incur"), any Indebtedness other than any or all of the following: (i) Indebtedness in connection with the Securities, this Indenture or any Security Document; (ii) Indebtedness outstanding on the Issue Date and included on Schedule 1.01 hereto; (iii) Allowed Indebtedness and Permitted Indebtedness; (iv) Working Capital Indebtedness; and (v) any Indebtedness issued in exchange for or to repay, prepay, repurchase, redeem, defease, retire or refinance ("refinance") any Indebtedness permitted by clauses (i) through (iv) above; provided that (A) if the principal amount of the Indebtedness so issued shall exceed the principal amount of the Indebtedness so exchanged or refinanced, plus any required premium, transaction costs and fees incurred in connection with such exchange or refinancing, then such excess shall be permitted only to the extent that such Indebtedness is otherwise permitted to be incurred under this covenant and (B) the Indebtedness so issued either: (x) (1) has a stated maturity not earlier than the stated maturity of the Indebtedness so exchanged or refinanced; (2) has an average life to stated maturity equal to or greater than the remaining average life to stated maturity of the Indebtedness so exchanged or refinanced; and (3) is subordinated to the obligations of the Company under this Indenture to at least the same extent, if any, as the Indebtedness so exchanged or refinanced or (y) is otherwise permitted to be incurred under this covenant. SECTION 1012. Limitation on Subsidiary Indebtedness and Preferred Stock. The Company shall not cause or permit any Subsidiary to incur or issue, directly or indirectly, any Indebtedness or Preferred Stock other than any or all of the following: (i) Indebtedness under the Guarantee or in connection with the Securities, this Indenture and the Security Documents; (ii) Indebtedness or Preferred Stock issued to and held by the Company or a wholly-owned Subsidiary of the Company to the extent such Indebtedness or Preferred Stock is subject to a first priority lien in favor of the Trustee; provided that (A) any subsequent issuance or transfer of any Capital Stock that results in any such wholly-owned Subsidiary ceasing to be a wholly-owned Subsidiary or (B) any transfer of such Indebtedness or Preferred Stock to a Person other than the Company or a wholly-owned Subsidiary of the Company will be deemed to be the issuance of such Indebtedness or Preferred Stock by the issuer thereof; (iii) Allowed Indebtedness and Permitted Indebtedness; 57 (iv) Working Capital Indebtedness; and (v) any Indebtedness issued in exchange for or to refinance any Indebtedness permitted by clause (i) through (iv) above; provided that (A) if the principal amount of the Indebtedness so issued does not exceed the principal amount of the Indebtedness so exchanged or refinanced, plus any required premium, transaction costs and fees incurred in connection with such exchange or refinancing, then such excess shall be permitted only to the extent that such Indebtedness is otherwise permitted to be incurred under this covenant and (B) the Indebtedness so issued either (x) (1) has a stated maturity date or an initial mandatory redemption date later than the stated maturity date of the Indebtedness so exchanged or refinanced, (2) has an average life to stated maturity equal to or greater than the remaining average life to stated maturity of the Indebtedness so exchanged or refinanced and (3) is subordinated to the Notes on the Guarantee of Guarantor or any other subsidiary guarantee to at least the same extent as the Indebtedness so exchanged or refinanced or (y) is otherwise permitted to be incurred under this covenant. SECTION 1013. Limitation on Restricted Payments. The Company shall not make, directly or indirectly, and shall not permit any Subsidiary to make, directly or indirectly, any Restricted Payment, provided that the foregoing shall not limit the right or power of: (i) the Company or any Subsidiary to make or provide for the Permitted Payment; or (ii) the Guarantor to make any payments or distributions to the Company to provide for (A) the payment or performance by the Company of its obligations under this Indenture, the Security Documents and the Securities and (B) such other amounts as may be necessary to pay its normal, ordinary course operating expenses (such as legal and accounting costs and fees for Commission filings). SECTION 1014. Limitation on Liens. The Company shall not, and shall not permit, cause or suffer any Subsidiary to create, incur, assume or suffer to exist any Lien of any kind upon any of its property or assets (including, without limitation, any income or profits) now owned or hereafter acquired by it, other than any or all of the following: (i) Liens existing on the Issue Date; (ii) Liens created by this Indenture and the Security Documents or that otherwise secure the Guaranty or the Securities; (iii) Liens securing Permitted Indebtedness, FF&E Financing and/or Capitalized Lease Obligations permitted pursuant to the Indenture; (iv) Permitted Liens; and (v) The replacement, extension or renewal of any Lien permitted by clauses (i), (ii), (iii) or (iv) above upon or in the same property theretofore subject thereto or the replacement, extension or renewal (without increase in the principal amount, except as 58 permitted hereunder) of the Indebtedness secured thereby, or otherwise permitted by this Indenture. SECTION 1015. [Intentionally Omitted.] SECTION 1016. Limitation on Sale-Leaseback Transactions. Unless otherwise consented to by the Requisite Lenders, the Company shall not, directly or indirectly, and shall not permit any Subsidiary to, directly or indirectly, enter into, guarantee or otherwise become liable with respect to any Sale-Leaseback Transaction with respect to any Collateral unless (a) such Sale-Leaseback Transaction is otherwise permitted pursuant to Section 1014; (b) the consideration received by the Company and/or any of its Subsidiaries for such Sale-Leaseback Transaction is at least equal to the Fair Market Value of such property being transferred; and (c) the Net Cash Proceeds of the sale shall be applied in accordance with Section 1017. Notwithstanding anything contained in this covenant, the Company shall not, and shall not permit any Subsidiary to, directly or indirectly, enter into, guarantee or otherwise become liable with respect to any other Sale-Leaseback Transaction involving the Collateral SECTION 1017. Limitation on Asset Sales. Subject to and as permitted by the terms of this Indenture and the terms of any release or subordination contemplated by Section 1405 hereof, the Company shall not, directly or indirectly, and shall not permit any Subsidiary to, directly or indirectly, make any Asset Sale of Collateral unless (a) at the time of such Asset Sale, the Company or such Subsidiary, as the case may be, receives consideration at least equal to the Fair Market Value of the assets sold or otherwise disposed of (or in the case of a lease or similar arrangement, receives an agreement for the payment pursuant to the terms of such lease of rents from time to time at fair value); (b) the proceeds therefrom (in the case of a lease, when paid from time to time) consist of at least 85% cash and/or Cash Equivalents; (c) no Default or Event of Default shall have occurred and be continuing at the time of or after giving effect to such Asset Sale; (d) otherwise expressly provided herein, the Net Cash Proceeds of such Asset Sale shall be applied in connection with the offer to purchase the Securities described below; and (e) the Company and its Subsidiaries may engage in an Asset Sale involving Collateral only in accordance with Article Fourteen. On or before the 180th day after the date on which the Company or any Subsidiary consummates the relevant Asset Sale of Collateral and subject to and as permitted by the terms of this Indenture and the terms of any release or subordination contemplated in Section 1405 hereof, the Company shall use all of the Net Cash Proceeds from such Asset Sale to make either (a) an offer to purchase (the "Asset Sale Offer") from all holders of Securities up to a maximum principal amount (expressed as a multiple of $1,000) of Securities equal to such Net Cash Proceeds at a purchase price equal to 100% of the principal amount thereof plus accrued and unpaid interest thereon, if any, to the date of purchase or (b) a Permitted Related Investment, upon consummation of which the Trustee shall have received a first priority fully perfected security interest in the property on assets acquired by the Company or any of its Subsidiaries in connection therewith, subject to and as permitted by the terms of this Indenture and the terms of any release or subordination contemplated in Section 1405 hereof; provided, that the Company shall not be required to make any Asset Sale Offer if the Net Cash Proceeds of all Asset Sales and Events of Loss that are not used to make a Permitted Related Investment within 180 days or 59 365 days,respectively, do not exceed $5 million. Each Asset Sale Offer shall remain open for a period of at least 20 business days. To the extent the Asset Sale Offer is not fully subscribed to by the holders of the Securities, the Company or the relevant Subsidiary may retain such unutilized portion of the Net Cash Proceeds. If the Asset Sale Offer is more than fully subscribed to by the Holders of the Securities, the particular Securities to be accepted shall be selected by such method as the Trustee shall deem fair and appropriate and which may provide for the selection of portions of the principal of Securities; provided, however, that no such partial acceptance shall reduce the portion of the principal amount of a Security not redeemed to less than, $1,000; and provided further that so long as the Securities are listed on any national securities exchange (as such term is defined in the Exchange Act), such selection shall be made by the Trustee in accordance with the provisions of such exchange. Subject to and as permitted by the terms of this Indenture and the terms of any release or subordination contemplated by Section 1405 hereof, the Company or such Subsidiary, as the case may be, shall cause such Net Cash Proceeds derived from the sale of Collateral to be deposited in the Collateral Account on the business day on which such Net Cash Proceeds are received by the Company or such Subsidiary. Collateral Proceeds (including any earnings thereon) may be released from the Collateral Account only in accordance with Section 1404. SECTION 1018. Application of Net Cash Proceeds in Event of Loss. Subject to and as permitted by the terms of this Indenture and the terms of any release or subordination contemplated by Section 1405 hereof, in the event that the Company or any Subsidiary suffers any Event of Loss to any Collateral, on or before the 365th day after the date that the Company or such Subsidiary receives any Net Cash Proceeds from such Event of Loss to Collateral, the Company shall use all of the Net Cash Proceeds from such Event of Loss to make either (a) an offer to purchase (the "Event of Loss Offer") from all holders of Securities up to a maximum principal amount (expressed as a multiple of $1,000) of Securities equal to the Net Cash Proceeds at a purchase price equal to 100% of the principal amount thereof plus accrued and unpaid interest thereon, if any, to the date of purchase or (b) a Permitted Related Investment, upon consummation of which the Trustee shall have received a first priority fully perfected security interest in the property on assets acquired by the Company or any of its Subsidiaries in connection therewith, subject to and as permitted by the terms of this Indenture and the terms of any release or subordination contemplated by Section 1405 hereof; provided, that the Company shall not be required to make any Event of Loss Offer if the Net Cash Proceeds of all Events of Loss to and Asset Sales of Collateral that are not used to make a Permitted Related Investment within 365 days or 180 days, respectively, do not exceed $5 million. Each Event of Loss Offer shall remain open for a period of at least 20 Business Days. To the extent the Event of Loss Offer is not fully subscribed to by the holders of the Securities, the Company or the relevant Subsidiary may retain such unutilized portion of the Net Cash Proceeds. If the Event of Loss Offer is more than fully subscribed to by the Holders of the Securities, the particular Securities to be accepted shall be selected by such method as the Trustee shall deem fair and appropriate and which may provide for the selection of portions of the principal of Securities; provided, however, that no such partial acceptance shall reduce the portion of the principal amount of a Security not redeemed to less than $1,000; and provided further that so long as the Securities are listed on any national securities exchange (as such term is defined in the Exchange Act), such selection shall be made by the Trustee in accordance with the provisions of such exchange. 60 Subject to and as permitted by the terms of this Indenture and the terms of any release or subordination contemplated by Section 1405 hereof, the Company or such Subsidiary, as the case may be, shall cause such Net Cash Proceeds derived from the loss of Collateral to be deposited in the Collateral Account on the Business Day on which such Net Cash Proceeds are received by the Company or such Subsidiary. Collateral Proceeds (including any earnings thereon) may be released from the Collateral Account only in accordance with Section 1404. SECTION 1019. Ownership of Stock of Subsidiaries. The Company shall at all times maintain, or cause each Subsidiary to maintain, ownership of all of each class of Voting Stock of, and all other equity securities in, each Person that, as of the Issue Date was a Subsidiary of the Company, to the extent the same is included in the Collateral, except any Subsidiary that shall be disposed of in its entirety, or consolidated or merged with or into the Company or another Subsidiary, in each case in accordance with Article Eight. Subject to and as permitted by the terms of this Indenture and the terms of any release or subordination contemplated by Section 1405 hereof, such stock will be subject to a first priority fully perfected security interest in favor of the Trustee. SECTION 1020. Limitation on Transactions with Affiliates. The Company shall not, and shall not permit, cause or suffer any Subsidiary to, conduct any business or enter into any transaction or series of transactions (including, without limitation, the sale, transfer, disposition, purchase, exchange, lease or use of assets, property or services) or enter into any contract, agreement, understanding, loan, advance or guarantees with any of their respective Affiliates (each an "Affiliate Transaction") other than (a) transactions among the Company and its Subsidiaries; (b) transactions involving aggregate payments or other Fair Market Value, of less than $5 million in any consecutive 365-day period; (c) transactions made available to all Holders on a basis pro rata to their holdings of Securities; (d) the transactions described in the Company's filings on Form S-4 filed with the Commission on June 1, 2004; and (e) those that are hereafter set forth in writing and are determined by the Board of Directors of the Company (including a majority of the Independent members of such Board), to be on terms which are no less favorable to the Company and its Subsidiaries than would be obtained in an arm's length transaction with an unaffiliated third party. The Company shall deliver to the Trustee an Officers' Certificate certifying that any such Affiliate Transaction contemplated in clause (e) above has received the requisite approval of its Board of Directors. SECTION 1021. Change in Nature of Business. Guarantor shall not, and shall not permit any of its Subsidiaries to, own, manage or conduct any operation other than a Permitted Line of Business. SECTION 1022. Additional Collateral. Subject to and as permitted by the terms of this Indenture and the terms of any release or subordination contemplated by Section 1405 hereof, the Company will, and will cause each of its Subsidiaries that owns any Collateral to, grant to the Trustee a valid and perfected first priority security interest in such Collateral enforceable against all third parties, and to execute and deliver all documents and to take all action reasonably necessary or desirable to perfect and protect such a security interest in favor of the Trustee, including the execution of the form of Security Agreement Supplement appended to the Security Agreement. 61 SECTION 1023. CRDA Investments. The Company will not, and will not permit any of its Subsidiaries to, directly or indirectly (a) grant a security interest in its CRDA Investments to any Person other than any grant of a security interest or other Lien (a "Permitted Grant") to: (i) the Casino Reinvestment Development Authority of the State of New Jersey ("CRDA"); (ii) any other entity as required by applicable law; or (iii) any person so long as such action will not result in a violation of applicable law or (b) sell, convey, transfer, lease or otherwise dispose of its CRDA Investments otherwise than either (A) in accordance with the terms of a Permitted Grant or (B) for fair value (in either cases except to or on behalf of the CRDA for a CRDA project), which shall be determined by, in their absolute discretion, and evidenced by a resolution of, the Board of Directors of the Company or such Subsidiary, as the case may be. SECTION 1024. Subsidiaries. The Trustee will receive a pledge of the stock of any Person that is a Subsidiary of the Company on the Issue Date in accordance with the Security Agreement, subject to and as permitted by the terms of this Indenture and the terms of any release or subordination contemplated by Section 1405 hereof. Except as otherwise provided in this Indenture, the Company will not, and will not permit any Subsidiary to, take any action or enter into any transaction or series of transactions that would result in a Person becoming a Subsidiary (whether through an acquisition or otherwise) unless, after giving effect to such action, transaction or series of transactions, before and immediately after giving effect thereto no Default or Event of Default shall have occurred and be continuing. SECTION 1025. Security Documents. Simultaneously herewith, the Company shall execute, and shall cause its Subsidiaries to execute, the respective Security Documents, as appropriate, securing its obligations under this Indenture, the Security Documents and the Securities. Each Holder, by accepting a Security, agrees to all terms and provisions of the Security Documents as the same may be amended or supplemented from time to time pursuant to the provisions hereof and thereof, including, without limitation, the terms of any release or subordination contemplated in Section 1405 hereof. The terms of the release of the Collateral and the rights of the Holders with respect thereto shall be governed by the Security Documents and this Indenture, including, without limitation, the terms of any release or subordination contemplated in Section 1405 hereof. SECTION 1026. Validity of Security Interest. Each of the Company and the Guarantor represents and warrants that it has, and covenants that it shall continue to have, full power and lawful authority to grant, release, convey, assign, transfer, mortgage, pledge, hypothecate and otherwise create the Security Interest referred to in Article Fourteen; and, subject to and as permitted by the terms of this Indenture and the terms of any release or subordination contemplated by Section 1405 hereof, each of the Company and the Guarantor shall warrant, preserve and defend the Security Interest of the Trustee in and to the Collateral or any asset that should constitute Collateral (other than real property with respect to matters covered by title insurance policies obtained by the Company or its Subsidiaries) but for the fact that the Company and/or its Subsidiaries failed to comply with the provisions of the Indenture or the Security Documents against the claims of all persons, and 62 will maintain and preserve the Security Interest contemplated by Article Fourteen. Subject to and as permitted by the terms of this Indenture and the terms of any release or subordination contemplated by Section 1405 hereof, the Company and its Subsidiaries shall be required to execute and deliver all documents and take all action reasonably necessary or desirable to perfect and protect a security interest in Collateral or any asset that would constitute Collateral but for the fact that the Company and/or its Subsidiaries failed to comply with the provisions of the Indenture or the Security Documents, before engaging in any sale, transfer, conveyance, or other disposition of such assets to the Company or any of its wholly-owned Subsidiaries. SECTION 1027. Duty of Cooperation. The Guarantors and their respective directors, officers and Affiliates shall cooperate with the Casino Control Commission and the Division of Gaming Enforcement and provide such information and documentation as may from time to time be requested by such agencies unless being contested in good faith by appropriate proceedings. ARTICLE ELEVEN REDEMPTION OF SECURITIES SECTION 1101. Redemption. With the consent of the Requisite Lenders, the Securities may be redeemed, at the election of the Company, as a whole or from time to time in part, at the times, subject to the conditions and at the Redemption Price specified in the form of Security, together with accrued interest to the Redemption Date. SECTION 1102. Applicability of Article. Redemption of Securities pursuant to Section 1101 or otherwise, as permitted or required by any provision of this Indenture, shall be made in accordance with such provision and this Article, other than repurchases made from time to time in the open market. SECTION 1103. Election to Redeem; Notice to Trustee. The election of the Company to redeem any Securities pursuant to Section 1101 shall be evidenced by a Board Resolution and a consent executed by the Requisite Lenders. In case of any redemption at the election of the Company, the Company shall, at least 60 days prior to the Redemption Date fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee of such Redemption Date and of the principal amount of Securities to be redeemed and shall deliver to the Trustee such documentation and records as shall enable the Trustee to select the Securities to be redeemed pursuant to Section 1104. SECTION 1104. Selection by Trustee of Securities to Be Redeemed. If less than all the Securities are to be redeemed, the particular Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee, from the Outstanding Securities not previously called for redemption, by such method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of portions of the principal of Securities; provided, however, that no such partial redemption 63 shall reduce the portion of the principal amount of a Security not redeemed to less than $1,000 and, provided further that, so long as the Securities are listed on any national securities exchange (as such term is defined in the Exchange Act), any such redemption shall be made by the Trustee in accordance with the provisions of such exchange. The Trustee shall promptly notify the Company in writing of the Securities selected for redemption and, in the case of any Securities selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to redemption of Securities shall relate, in the case of any Security redeemed or to be redeemed only in part, to the portion of the principal amount of such Security which has been or is to be redeemed. SECTION 1105. Notice of Redemption. Notice of redemption shall be given in the manner provided for in Section 106 not less than 30 nor more than 60 days prior to the Redemption Date, to each Holder of Securities to be redeemed; provided, however, that in the case of an optional redemption in which the Company has called for redemption all outstanding Securities in connection with a refinancing of such Securities, the Company shall be permitted to (a) specify a proposed redemption date; (b) change the proposed redemption date once to a final redemption date by notice mailed to Holders not later than five business days prior to the final redemption date; (c) establish the final redemption date as a date not more than 90 days after the first notice from the Company calling the Securities for optional redemption was mailed to Holders; and (d) rescind the redemption offer at any time prior to the final redemption date, which rescission shall not cause the maturity of the Securities to have changed. All notices of redemption shall state: (i) the Redemption Date; (ii) the Redemption Price; (iii) if less than all Outstanding Securities are to be redeemed, the identification (and, in the case of a partial redemption, the principal amounts) of the particular Securities to be redeemed; (iv) that on the Redemption Date the Redemption Price (together with accrued interest, if any, to the Redemption Date payable as provided in Section 1107) will become due and payable upon each such Security, or the portion thereof, to be redeemed, and that interest thereon will cease to accrue on and after said date; and (v) the place or places where such Securities are to be surrendered for payment of the Redemption Price. Notice of redemption of Securities to be redeemed at the election of the Company shall be given by the Company or, at the Company's request, by the Trustee in the name and at the expense of the Company. 64 SECTION 1106. Deposit of Redemption Price. Prior to any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 1003) in immediately available funds an amount of money sufficient to pay the Redemption Price of, and accrued interest on, all the Securities which are to be redeemed on that date. SECTION 1107. Securities Payable on Redemption Date. Notice of redemption having been given as aforesaid, the Securities so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified (together with accrued interest, if any, to the Redemption Date), and from and after such date (unless the Company shall default in the payment of the Redemption Price and accrued interest) such Securities shall cease to bear interest. Upon surrender of any such Security for redemption in accordance with said notice, such Security shall be paid by the Company at the Redemption Price, together with accrued interest, if any, to the Redemption Date. If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal (and premium, if any) shall, until paid, bear interest from the Redemption Date at the rate borne by the Securities. SECTION 1108. Securities Redeemed in Part. Any Security which is to be redeemed only in part shall be surrendered at the office or agency of the Company maintained for such purpose pursuant to Section 1002 (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or such Holder's attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and deliver to the Holder of such Security without service charge, a new Security or Securities, of any authorized denomination as requested by such Holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Security so surrendered. SECTION 1109. Redemption Pursuant to Gaming Laws. (a) If required to qualify by the Casino Control Commission, all Holders, whether initial Holders or subsequent transferees, shall be subject to the qualification provisions of the Casino Control Act relating to financial sources and/or security holders. In the event that the Casino Control Commission determines that a Holder is not qualified under the Casino Control Act and/or such Holder fails to submit for qualification as required by the Casino Control Commission in its sole discretion, the Company shall have the absolute right and obligation to purchase from such Holder (the "Disqualified Holder") the Securities the Disqualified Holder may then possess, either directly, indirectly or beneficially, no later than forty-five days after the date the Company serves notice on any Disqualified Holder of such determination. Immediately upon such determination, the Disqualified Holder shall have no further right (i) to exercise, directly or indirectly, through any trustee or nominee or any other person or entity, any right conferred by any Securities and (ii) to receive any dividends, interest, or any other distribution or payment with respect to any such Securities or any remuneration in any form from the Company or the Trustee; provided, however, that after such disqualification, interest on any such Securities 65 shall continue to accrue for the benefit of any subsequent Holder thereof. The Company shall promptly provide to the Trustee a copy of each notice served to a Disqualified Holder. (b) Upon receipt of the notice referred to in clause (a) above, the Disqualified Holder may sell its Securities either directly to any Person then qualified or previously qualified (and not subsequently disqualified) or through a bona fide brokerage transaction, conducted at arm's-length, to a Person not an Affiliate of the Disqualified Holder. In the event the Disqualified Holder fails to so sell its Securities within thirty (30) days after the determination by the Casino Control Commission, the Company shall purchase such Securities within fifteen (15) days after the end of such thirty (30) day time period, at a time and place as designated by the Company: (i) at the lowest of (A) the principal amount thereof; (B) the amount which the Disqualified Holder or beneficial owner paid for the Securities, together with accrued interest up to the date of the determination of disqualification; or (C) the market value of such Securities. The right of the Company to purchase such Security may be assigned by the Company to any Person approved by the Casino Control Commission or (ii) in lieu of a purchase pursuant to clause (i), at the election of the Company if the same is consented to by the Requisite Lenders, in exchange for the number of shares of Applicable Common Stock that would be payable in respect of such Securities in the event of a Demand Payment. (c) The provisions of this Section shall be construed in accordance with the applicable provisions of the Casino Control Act. ARTICLE TWELVE GUARANTEE ARRANGEMENTS SECTION 1201. Guarantee. Guarantor hereby unconditionally guarantees (such guarantee referred to as the "Guarantee") to each Holder of a Security authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of this Indenture, the Securities, any of the Security Documents or the obligations of the Company to the Holders or the Trustee hereunder or thereunder, that: (a) the principal of, any interest on the Securities (including, without limitation, any interest that accrues after the filing of a proceeding of the type described in Sections 501(7) and (8) hereof), premium, fees, expenses and all other amounts will be duly and punctually paid in full when due, whether at maturity, by acceleration or otherwise, and interest on the overdue principal and (to the extent permitted by law) interest, if any, on the Securities and all other obligations of the Company to the Holders or the Trustee hereunder or thereunder including fees, expenses or other charges whether now or hereafter existing will be promptly paid in full or performed, all strictly in accordance with the terms hereof and thereof and (b) in case of any extension of time of payment or renewal of any Securities or any of such other obligations, the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at Stated Maturity, by acceleration or otherwise. Failing payment when due of any amount so guaranteed, or failing performance of any other obligations of the Company to the Holders, for whatever reason, Guarantor will be obligated to pay, or to perform or cause the performance of, the same immediately. An Event of Default under this Indenture, any Security Document or the Securities shall constitute an event of default under this Guarantee, and shall entitle the Holders of 66 Securities to accelerate the obligations of the Guarantor hereunder in the same manner and to the same extent as the obligations of the Company. The obligations of the Guarantor are independent of any obligation of the Company. The Guarantor hereby agrees that its obligations hereunder shall be absolute and unconditional, irrespective of the validity, regularity or enforceability of the Securities, any Security Document, this Indenture or any other document relating thereto, the absence of any action to enforce the same, any waiver or consent by any Holder with respect to any provisions hereof or thereof, any release or non-perfection of Collateral, any delays in obtaining or realizing upon or failure to obtain or realize upon or application of Collateral, the recovery of any judgment against the Company or any other Person, any action to enforce the same or any other circumstance (including, without limitation, any statute of limitations) which might otherwise constitute a legal or equitable discharge or defense of a guarantor. The Guarantor hereby waives promptness, diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company or any other Person, any right to require a proceeding first against the Company or any other Person, protest, notice and all demands whatsoever and covenants that its Guarantee will not be discharged except by complete performance of the obligations contained in the Securities, this Indenture, the Security Documents and this Guarantee. If any Holder or the Trustee is required by any court or otherwise to return to the Company or to the Guarantor, or any custodian, trustee, liquidator or other similar official acting in relation to the Company or the Guarantor, any amount paid by the Company or the Guarantor to the Trustee or such Holder, this Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect. The Guarantor hereby irrevocably waives any claim or other rights that it may now or hereafter acquire against the Company or any other insider guarantor that arise from the existence, payment, performance or enforcement of Guarantor's obligations under this Guarantee, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy of the Holders or the Trustee against the Company or any other insider guarantor or any Collateral, whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive from the Company or any other insider guarantor, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim, remedy or right. If any amount shall be paid to the Guarantor in violation of the preceding sentence at any time prior to the later of the payment in full of the Securities and all other amounts payable under this Guarantee and the Maturity Date, such amount shall be held in trust for the benefit of the Holders and the Trustee and shall forthwith be paid to the Trustee to be credited and applied to the Securities and all other amounts payable under this Guarantee, whether matured or unmatured, in accordance with the terms of this Indenture, or to be held as Collateral for any obligations or other amounts payable under this Guarantee thereafter arising. The Guarantor acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by this Indenture and that the waiver set forth in this subsection is knowingly made in contemplation of such benefits. The Guarantor further agrees that, as between it, on the one hand, and the Holders and the Trustee, on the other hand, (x) subject to this Article Twelve, the maturity of the obligations guaranteed hereby may be accelerated as provided in Article Five hereof for the purposes of this Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby and (y) in the event of any acceleration of such obligations as provided in 67 Article Five hereof, such obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantor for the purpose of this Guarantee. SECTION 1202. Execution and Delivery of Guarantee. To further evidence the Guarantee set forth in Section 1201, the Guarantor hereby agrees that notation of such Guarantee shall be endorsed on each security authenticated and delivered by the Trustee and executed by either manual or facsimile signature of an authorized Officer of the Guarantor. The Guarantor hereby agrees that its Guarantee set forth in Section 1201 shall remain in full force and effect notwithstanding any failure to endorse on each Security a notation of such Guarantee. If an Officer of Guarantor whose signature is on this Indenture or a Security no longer holds that office at the time the Trustee authenticates such Security or at any time thereafter, Guarantor's Guarantee of such Security shall be valid nevertheless. The delivery of any Security by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of any Guarantee set forth in this Indenture on behalf of the Guarantor. SECTION 1203. Additional Guarantors. Any Person that was not a Guarantor on the date of this Indenture may become a Guarantor by executing and delivering to the Trustee (a) a supplemental indenture in form and substance satisfactory to the Trustee, which subjects such Person to the provisions (including the representations and warranties) of the Indenture as a Guarantor and (b) an Opinion of Counsel to the effect that such supplemental indenture has been duly authorized and executed by such Person and constitutes the legal, valid, binding and enforceable obligation of such Person (subject to such customary exceptions concerning creditors' rights and equitable principles as may be acceptable to the Trustee in its discretion). SECTION 1204. Termination of Guarantee. This Guarantee and all of the obligations of the Guarantor under this Indenture, the Security Documents, and the Securities and any other related documents or agreements may be amended, modified or terminated by the Company with the consent of the Requisite Lenders. ARTICLE THIRTEEN DEFEASANCE AND COVENANT DEFEASANCE SECTION 1301. Company's Option to Effect Defeasance or Covenant Defeasance. The Company may, at its option by Board Resolution, at any time, with respect to the Securities, elect to have either Section 1302 or Section 1303 be applied to all Outstanding Securities upon compliance with the conditions set forth below in this Article Thirteen. 68 SECTION 1302. Defeasance and Discharge. Upon the Company's exercise under Section 1301 of the option applicable to this Section 1302, the Company shall be deemed to have been discharged from its obligations with respect to all Outstanding Securities on the date the conditions set forth in Section 1304 are satisfied (hereinafter, "defeasance"). For this purpose, such defeasance means that the Company shall be deemed to have paid and discharged the entire indebtedness represented by the Outstanding Securities, which shall thereafter be deemed to be "Outstanding" only for the purposes of Section 1305 and the other Sections of this Indenture referred to in (a) and (b) below, and to have satisfied all its other obligations under such Securities and this Indenture insofar as such Securities are concerned (and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging the same) and releasing the liens and security interests created by the Security Documents, except for the following, which shall survive until otherwise terminated or discharged hereunder: (a) the rights of Holders of Outstanding Securities to receive, solely from the trust fund described in Section 1304 and as more fully set forth in such Section, payments in respect of the principal of (and premium, if any, on) and interest on such Securities when such payments are due; (b) the Company's obligations with respect to such Securities under Sections 304, 305, 306, 1002 and 1003; (c) the rights, powers, trusts, duties and immunities of the Trustee hereunder; and (d) this Article Thirteen. Subject to compliance with this Article Thirteen, the Company may exercise its option under this Section 1302 notwithstanding the prior exercise of its option under Section 1303 with respect to the Securities. SECTION 1303. Covenant Defeasance. Upon the Company's exercise under Section 1301 of the option applicable to this Section 1303, the Company shall be released from its obligations under any covenant contained in Section 801 and in Sections 1005 through 1026 with respect to the Outstanding Securities on and after the date the conditions set forth below are satisfied (hereinafter, "covenant defeasance"), and the Securities shall thereafter be deemed not to be "Outstanding" for the purposes of any direction, waiver, consent or declaration or Act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed "Outstanding" for all other purposes hereunder. For this purpose, such covenant defeasance means that, with respect to the Outstanding Securities, the Company may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Section 501(3) or otherwise, but, except as specified above, the remainder of this Indenture and such Securities shall be unaffected thereby. SECTION 1304. Conditions to Defeasance or Covenant Defeasance. The following shall be the conditions to application of either Section 1302 or Section 1303 to the Outstanding Securities: (i) The Company shall irrevocably have deposited or caused to be deposited with the Trustee (or another trustee satisfying the requirements of Section 607 who shall agree to comply with the provisions of this Article Thirteen applicable to it) as trust funds, for a period of at least 123 days prior to the date of such defeasance, in trust for the purpose of 69 making the following payments, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of such Securities, (A) money in an amount, or (B) U.S. Government Obligations which through the scheduled payment of principal and interest in respect thereof in accordance with their terms will provide, not later than one day before the due date of any payment, money in an amount, or (C) a combination thereof, sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge, and which shall be applied by the Trustee (or other qualifying trustee) to pay and discharge, the principal of (and premium, if any, on) and interest on the Outstanding Securities on the Stated Maturity (or Redemption Date, if applicable) of such principal (and premium, if any) or installment of interest; provided that the Trustee shall have been irrevocably instructed to apply such money or the proceeds of such U.S. Government Obligations to said payments with respect to the Securities. Before such a deposit the Company may give to the Trustee, in accordance with Section 1103 hereof, a notice of its election to redeem all of the Outstanding Securities at a future date in accordance with Article Eleven hereof, which notice shall be irrevocable. Such irrevocable redemption notice, if given, shall be given effect in applying the foregoing. For this purpose, "U.S. Government Obligations" means securities that are (1) direct obligations of the United States of America for the timely payment of which its full faith and credit is, pledged or (2) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the timely payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case, are not callable or redeemable at the option of the issuer thereof, and shall also include a depository receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act of 1933, as amended), as custodian with respect to any such U.S. Government Obligation or a specific payment of principal of or interest on any such U.S. Government Obligation held by such custodian for the account of the holder of such depository receipt, provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the U.S. Government Obligation or the specific payment of principal of or interest on the U.S. Government Obligation evidenced by such depository receipt. (ii) No Default or Event of Default with respect to the Securities shall have occurred and be continuing on the date of such deposit or, insofar as paragraphs (7) and (8) of Section 501 hereof are concerned, at any time during the period ending on the 123rd day after the date of such deposit(it being understood that this condition shall not be deemed satisfied until the expiration of such period). (iii) Such defeasance or covenant defeasance shall not result in a breach or violation of, or constitute a default under, this Indenture or any other material agreement or instrument to which the Company is a party or by which it is bound. (iv) In the case of an election under Section 1302, the Company shall have received the consent of the Requisite Lenders and delivered to the Trustee an Opinion of Counsel stating that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling, or (B) there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of the Outstanding Securities will not recognize income, gain or 70 loss for federal income tax purposes as a result of such defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such defeasance had not occurred. (v) In the case of an election under Section 1303, the Company shall have received the consent of the Requisite Lenders and delivered to the Trustee an Opinion of Counsel to the effect that the Holders of the Outstanding Securities will not recognize income, gain or loss for federal income tax purposes as a result of such covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred. (vi) The Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for relating to either the defeasance under Section 1302 or the covenant defeasance under Section 1303 (as the case may be) have been complied with. SECTION 1305. Deposited Money and U.S. Government Obligations To Be Held in Trust; Other Miscellaneous Provisions. Subject to the provisions of the last paragraph of Section 1003, all money and U.S. Government Obligations (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 1305, the "Trustee") pursuant to Section 1304 in respect of the Outstanding Securities shall be held in trust and applied by the Trustee, in accordance with the provisions of such Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Holders of such Securities of all sums due and to become due thereon in respect of principal (and premium, if any) and interest, but such money need not be segregated from other funds except to the extent required by law. The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the U.S. Governmental Obligations deposited pursuant to Section 1304 or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the Outstanding Securities. Anything in this Article Thirteen to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon Company Request any money or U.S. Government Obligations held by it as provided in Section 1304 which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, are in excess of the amount thereof which would then be required to be deposited to effect an equivalent defeasance or covenant defeasance, as applicable, in accordance with this Article. SECTION 1306. Reinstatement. If the Trustee or any Paying Agent is unable to apply any money in accordance with Section 1305 by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company's obligations under this Indenture and the Securities shall be revived and reinstated as though no deposit had occurred pursuant to Section 1302 or 1303, as the case may be, until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 1305; provided, 71 however, that if the Company makes any payment of principal of (or premium, if any, on) or interest on any Security following the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Securities to receive such payment from the money held by the Trustee or Paying Agent. ARTICLE FOURTEEN SECURITY INTEREST SECTION 1401. Assignment of Security Interest. (a) In order to secure the performance of the Company's and the Guarantor's obligations to the Holders and the Trustee under this Indenture and the Securities, according to the terms hereunder or thereunder, any Grantor pursuant to the Security Documents has unconditionally and absolutely assigned to the Trustee for the benefit of itself and all Holders, a first priority security interest in the Collateral, subject to the limitations set forth in this Indenture, including, without limitation, Section 1405 hereof (the "Security Interest"). (b) The Security Interest as now or hereafter in effect shall be held for the Trustee and for the equal and ratable benefit and security of the Securities without preference, priority or distinction of any thereof over any other by reason, or difference in time, of issuance, sale or otherwise, and for the enforcement of the payment of principal of, premium, if any, and interest on the Securities in accordance with their terms. (c) Each of the Company and Guarantor has executed and delivered, filed and recorded and/or will execute and deliver, file and record, all instruments and documents, and has done or will do or cause to be done all such acts and other things as are necessary or desirable, subject to and as permitted by the terms of this Indenture and the terms of any release or subordination contemplated in Section 1405 hereof, to subject the Collateral to the Lien of the Security Documents. Each of the Company and Guarantor will execute and deliver, file and record all instruments and do all acts and other things as may be reasonably necessary or advisable to perfect, maintain and protect the Security Interest (including, without limitation, the first priority nature thereof) and shall pay all filing, recording, mortgage or other taxes or fees incidental thereto. (d) Each of the Company and Guarantor shall furnish to the Trustee (i) promptly after the recording or filing, or re-recording or re-filing of the Security Documents and other security filings, an Opinion of Counsel (who may be counsel for the Company or the Guarantor) stating that in the opinion of such counsel the Security Documents and other security filings have been properly recorded, filed, re-recorded or re-filed so as to make effective and perfect the Security Interest intended to be created thereby and reciting the details of such action and (ii) except for Collateral released as contemplated in Section 1405 hereof at least annually on the anniversary of the Issue Date, an Opinion of Counsel (who may be counsel for the Company or the Guarantor) either stating that in the opinion of such counsel such action with respect to the recording, filing, re-recording or re-filing of the Security Documents and other security filings has been taken as is necessary to maintain the Lien and Security Interest of the Security Documents and other security filings, subject to any subordination contemplated in Section 1405 hereof, and reciting the details of such action, or stating that in the opinion of such counsel no such action is 72 necessary to maintain such Lien and Security Interest. In giving the opinions required by this Section 1401(d) above, such counsel may rely, to the extent recited in such opinions, on (i) certificates of relevant public officials; (ii) certificates of an officer or officers of the Company, the Guarantors or any other Grantor; (iii) photocopies of filed and recorded documents certified by public officials as being accurate copies of such documents; (iv) the opinions of other counsel acceptable to the Trustee with respect to matters governed by law of any jurisdiction other than the state in which such counsel is licensed to practice law; and (v) title insurance policies and commitments. In addition, such opinions may contain such qualifications, exceptions and limitations as are appropriate for similar opinions relating to the nature of the Collateral. SECTION 1402. Suits to Protect the Collateral. To the extent permitted under the Security Documents and this Indenture, the Trustee shall have power, but not be obliged, to institute and maintain such suits and proceedings as it may deem expedient to prevent any impairment of the Collateral by any acts which may be unlawful or in violation of this Indenture or the Security Documents and such suits and proceedings as the Trustee may deem expedient to preserve or protect its interests and the interest of the Holders in the Collateral and in the profits, rents, revenues and other income arising therefrom (including power to institute and maintain suits or proceedings to restrain the enforcement of or compliance with any legislative or other governmental enactment, rule or order that may be unconstitutional or otherwise invalid if the enforcement of, or compliance with, such enactment, rule or order would impair the Security Interest thereunder or be prejudicial to the interest of the Holders or of the Trustee). SECTION 1403. Further Assurances and Security. Each of the Company and the Guarantor represents and warrants that at the time the Security Documents and this Indenture are executed, the Company and/or its Subsidiaries (i) will have full right, power and lawful authority to grant, bargain, sell, release, convey, hypothecate, assign, mortgage, pledge, transfer and confirm, absolutely, the Collateral, in the manner and form done, or intended to be done, in the Security Documents, free and clear of all Liens, except for the Liens created by the Security Documents or otherwise permitted by the Indenture or the Security Documents, and will forever warrant and defend the title to the same against the claims of all Persons whatsoever; (ii) will execute, acknowledge and deliver to the Trustee, at the Company's and/or its Subsidiaries' expense, at any time and from time to time such further assignments, transfer, assurances or other instruments as may be required to effectuate the terms of this Indenture or the Security Documents; and (iii) will at any time and from time to time do or cause to be done all such acts and things as may be necessary or proper, or as may be required by the Trustee, to assure and confirm to the Trustee the Security Interest in the Collateral contemplated hereby and by the Security Documents in each case, subject to and as permitted by the terms of this Indenture and the terms of any release or subordination contemplated by Section 1405 hereof. SECTION 1404. Release of Collateral. Subject to and as permitted by the terms of this Indenture and the terms of any release or subordination contemplated by Section 1405 hereof and unless otherwise consented to by the Requisite Lenders, the Company or any Subsidiary, as the case may be, shall cause such Net Cash Proceeds of any Asset Sale pursuant to Section 1017 that involves the sale of Collateral or 73 any Event of Loss pursuant to Section 1018 that involves a loss of Collateral to be deposited in the Collateral Account on the business day on which such Net Cash Proceeds are received by the Company or such Subsidiary. Subject to and as permitted by the terms of this Indenture and the terms of any release or subordination contemplated by Section 1405 hereof, Collateral Proceeds (including any earnings thereon) may be released from the Collateral Account in order to, and in only such amount as is required to, (x) pay the principal amount of Securities tendered pursuant to an Asset Sale Offer or Event of Loss Offer or (y) make a Permitted Related Investment; provided that upon consummation of such Permitted Related Investment the Trustee shall subject to and as permitted by the terms of this Indenture and the terms of any release or subordination contemplated by Section 1405 hereof, have received a first priority security interest in the property or assets acquired by the Company or any of its Subsidiaries in connection therewith and the Company delivers to the Trustee each of the following: (i) An Officers' Certificate, dated the date on which Collateral Proceeds shall be released from the Collateral Account (the "Collateral Proceeds Release Date"), stating in substance as to the following matters (which statements shall, on the Collateral Proceeds Release Date, be true): (A) the reason the Company is requesting a release of the Collateral Proceeds and a description of the use to be made of the Collateral Proceeds to be released; (B) in the case of clause (x) above, the aggregate principal amount of Securities purchased on the Collateral Proceeds Release Date and, in the case of clause (y) above, a description of the property or assets being acquired and the Fair Market Value and the purchase price of each such property or asset to be acquired by the Company and/or its Subsidiaries (if more than one); (C) that the amount to be released from the Collateral Account does not exceed the aggregate principal amount of Securities to be purchased on the Collateral Proceeds Release Date or the purchase price of the property or assets to be acquired by the Company or any of its Subsidiaries, as the case may be; (D) that, in the case of clause (y) above, the Company and/or its Subsidiaries, as the case may be, have taken all steps necessary or desirable so that upon consummation of such Permitted Related Investment the Trustee shall, subject to the terms of any release or subordination contemplated in Section 1405 hereof, receive a first priority security interest in such property or assets; and (E) that no Default or Event of Default has occurred and is continuing at the time of or after giving effect to such release of Collateral Proceeds. (ii) An Opinion of Counsel stating that the certificate, opinions, other instruments or cash which have been or are therewith delivered to and deposited with the Trustee conform to the requirements of this Indenture and that the property to be released may be lawfully released from the Lien of the Security Documents and that all conditions precedent in this Indenture and the Security Documents relating to such release have been complied with. In connection with any release of any lien in favor of the Trustee granted pursuant to the Security Documents on Collateral, the Company and the Guarantor shall comply, to the extent required thereby, with the applicable provisions of the TIA, including Section 314 thereof. 74 SECTION 1405. Release Notice; Subordination Request; Permitted Liens. (a) With the consent or approval or at the request of the Requisite Lenders, the Company shall deliver a Release Notice to the Trustee. A Release Notice may only be delivered by the Company from time to time with the consent of the Requisite Lenders. A Release Notice shall request that the Trustee execute one or more specifically described release instruments, documents and agreements (which release instruments, documents and agreements shall accompany such Release Notice) and shall (i) include a certified copy of the Board Resolution of the Company or any of its Subsidiaries in which such Board of Directors approved the delivery of the Release Notice; (ii) include a copy of the written consent of the Requisite Lenders to the Release Notice; (iii) be accompanied by an Officers' Certificate, including a certification that no Event of Default, or no default which with the passage of time or giving of notice would become an Event of Default, has occurred or is continuing, in each case unless waived in accordance with the terms of this Indenture; (iv) be accompanied by an Opinion of Counsel stating that the action contemplated by this Section 1405(a) is authorized and permitted by the Indenture and that all conditions precedent herein relating to such action have been complied with; and (v) if required by the TIA, certificates in accordance with Section 314 of the TIA. Upon receipt of a Release Notice the Trustee, at the Company's expense, shall execute and deliver, within seven Business Days from the receipt of such Release Notice, any instruments, documents and agreements specified by the Company or any of its Subsidiaries to release all or any part of the Collateral from the Security Interests or any other Liens created by the Security Documents or the Indenture including, without limitation, all instruments, documents and agreements necessary to release any and all Liens of record and to terminate the Security Documents together with any intercreditor agreements specified in such Release Notice. (b) With the consent or approval or at the request of the Requisite Lenders, the Company shall deliver a Subordination Request to the Trustee. A Subordination Request may only be delivered by the Company from time to time with the consent of the Requisite Lenders. A Subordination Request shall request that the Trustee execute one or more specifically described instruments, documents and agreements of subordination (which instruments of subordination shall accompany such Subordination Request) and shall (i) include a certified copy of the Board Resolution of the Company or any of its Subsidiaries in which such Board of Directors approved the delivery of the Subordination Request; (ii) include a copy of the written consent of the Requisite Lenders to the Subordination Request; (iii) certify that the subordination requested effects a subordination of the Security Interests only to the extent, and only with respect to the Collateral as to which such subordination is, contemplated by the Subordination Determination; (iv) be accompanied by an Officers' Certificate, including a certification that no Event of Default, and no default which with the passage of time or giving of notice would become an Event of Default, has occurred or is continuing, in each case unless waived in accordance with the terms of this Indenture; (v) be accompanied by an Opinion of Counsel stating that the action contemplated by this Section 1405(b) is authorized and permitted by the Indenture and that all conditions precedent herein relating to such action have been complied with; and (vi) if required by the TIA, certificates in accordance with Section 314 of the TIA. Upon receipt of a Subordination Request, the Trustee, at the Company's expense, will execute and deliver, within seven Business Days from the receipt of such Subordination Request, any instruments, documents and agreements specified by the Company or any of its Subsidiaries to subordinate the Security Interests or any other Liens created by the Security Documents or the 75 Indenture to any Lien that the Board of Directors of the Company or any of its Subsidiaries determines (each such determination, a "Subordination Determination") to accord priority over the Security Interests together with any intercreditor agreements specified in such Subordination Request. (c) In connection with any release of any lien pursuant to a Release Notice or the subordination of any lien pursuant to a Subordination Request, the Company and the Guarantor shall comply, to the extent required thereby, with the applicable provisions of the TIA, including Section 314 thereof. (d) Any release or subordination of Collateral made in compliance with the provisions of this Section 1405 shall be deemed for all purposes: (i) not to impair the Security Interests or impair the security under the Indenture in contravention of the terms or provisions of this Indenture or the Security Documents and (ii) not to constitute in any respect or for any purpose a breach, default or violation of any term or provision of this Indenture or the Security Documents and to the extent that any such breach, default or violation would otherwise result the same are hereby waived in all respects. (e) In addition to, and not in limitation of, any other rights, powers or privileges of the Company and its Subsidiaries, the Company and its Subsidiaries may incur Permitted Liens as and to the extent such action is in compliance with the terms of this Indenture and the Security Documents. (f) To the extent set forth in any Release Notice or Subordination Request or in the terms, provisions or conditions of any such release or subordination or any agreements, documents or instruments related thereto, associated therewith or arising from or in connection with any such release or subordination or any related or associated transaction, the terms of Section 1017, 1018 and 1404 hereof shall (i) cease to apply to the Assets that are the subject of such Release Notice or Subordination Request, and to any proceeds thereof or (ii) continue to apply to such Assets and proceeds only to the extent set forth in the terms, provisions or conditions of any such release or subordination or of any such agreements, documents or instruments. SECTION 1406. Reliance on Opinion of Counsel. The Trustee shall be fully protected in taking any action under this Article Fourteen or omitting to take any action, in reliance upon an Opinion of Counsel. SECTION 1407. Purchaser May Rely. Any person that acquires, obtains a Lien on or otherwise obtains any interest in good faith in the Collateral or any part thereof or interest therein which is purported to be transferred, granted or released by the Trustee as provided in this Article Fourteen shall not be bound to ascertain, and may rely on the authority of the Trustee to execute, transfer, grant or release, or to inquire as to the satisfaction of any conditions precedent to the exercise of such authority, or to see to the application of the purchase price therefor or any loan proceeds or other consideration relating thereto. 76 SECTION 1408. Payment of Expenses. On demand of the Trustee, the Company forthwith shall pay or satisfactorily provide for the payment of all reasonable expenditures incurred by the Trustee under this Article Fourteen, including, without limitation, the costs of title insurance, surveys, attorneys' fees and expenses, recording fees and taxes, transfer taxes, taxes on indebtedness and other expenses incidental thereto and all such sums shall be a Lien upon the Collateral prior to the Securities and shall be secured thereby. ARTICLE FIFTEEN CONVERSION AND DEMAND PAYMENT SECTION 1501. Conversion Following Election of Requisite Lenders. (a) Following delivery of written notice from the Requisite Lenders (which notice shall be deliverable in their sole and absolute discretion) to the Company and the Trustee stating that the Securities shall thereafter be convertible under this Section 1501(a) (the "Convertibility Election"), the Holder of any Note shall have the right, at its option, at any time following the date the Convertibility Notice was received by the Trustee, through the close of business on the final maturity date of the Notes (except that, with respect to any Note or portion of a Note that shall be called for redemption, such right shall terminate, except as provided in Section 1502, Section 1104 or Section 1105, at the close of business on the Business Day next preceding the date fixed for redemption of such Note or portion of a Note unless the Company shall default in payment due upon redemption thereof) to convert any such Note into that number of fully paid and non-assessable shares of Company Common Stock (as such shares shall then be constituted) obtained by multiplying the principal amount of the Note or portion thereof surrendered for conversion by the Stated Ratio (and shall also be entitled to receive any other securities required to be issued in respect of such Note as contemplated in Section 1504 below), by surrender of the Note so to be converted in whole or in part in the manner provided in Section 1502. (b) A holder of Notes is not entitled to any rights of a holder of Company Common Stock or other securities deliverable hereunder until such Notes are surrendered as provided in Section 1502. (c) For the avoidance of doubt, this Section 1501 shall not limit the power of the Requisite Lenders to provide the Demand Payment Notice at any time, either prior to or after the occurrence of the Convertibility Election and in such event the Notes shall be discharged and shall thereafter represent solely the right of the Holder to receive the Applicable Common Stock, all as more fully set forth in this Indenture. SECTION 1502. Exercise of Conversion Privilege; Demand Payment; Issuance of Common Stock; No Adjustment for Interest or Dividends. In order to exercise the conversion privilege or obtain Applicable Common Stock in connection with a Demand Payment with respect to any Note, the Holder of any such Note to be converted or so paid shall surrender such Note, duly endorsed, at an office or agency maintained by the Company pursuant to Section 1002, and, with respect to a conversion under Section 1501(a), shall give written notice of conversion (in the form of Exhibit B hereto or another form 77 acceptable to the Company) to the office or agency that the Holder elects to convert such Note or the portion thereof specified in said notice. In connection with such surrender, the Holder shall also state the name or names (with address or addresses) in which certificates for securities which shall be issuable on such conversion or payment shall be issued, and such surrender shall be accompanied by transfer taxes, if required pursuant to Section 1509. Each such Note surrendered for conversion or Demand Payment shall, unless the shares issuable on conversion or such payment are to be issued in the same name as the registration of such Note, be duly endorsed by, or be accompanied by instruments of transfer in form satisfactory to the Company duly executed by, the Holder or his duly authorized attorney. As promptly as practicable after satisfaction of the requirements for conversion or in respect of a Demand Payment in the form of the Applicable Common Stock, subject to compliance with any restrictions on transfer if shares issuable on conversion are to be issued in a name other than that of the Noteholder (as if such transfer were a transfer of the Note or Notes (or portion thereof) so converted or paid), the Company shall issue and shall deliver to such Noteholder a certificate or certificates for the securities issuable upon the conversion or payment in respect of a Demand Payment in the form of the Applicable Common Stock, of such Note or (in the case of a conversion) portion thereof as determined by the Company in accordance with the provisions of this Article Fifteen, calculated by the Company as provided in Section 1503. In case any Note of a denomination greater than $1,000 shall be surrendered for partial conversion, and subject to Section 302, the Company shall execute and the Trustee shall authenticate and deliver to the holder of the Note so surrendered, without charge to him, a new Note or Notes in authorized denominations in an aggregate principal amount equal to the unconverted portion of the surrendered Note. If a Note is surrendered for conversion in part, then a new Note will be issued but any such issuance will only be made in multiples of $1,000. Each conversion or payment in respect of a Demand Payment in the form of the Applicable Common Stock shall be deemed to have been effected so as to result in any Holder becoming a holder of Company Common Stock (or other securities issuable in respect of such conversion or Demand Payment as contemplated in Section 1504) on the date on which the requirements set forth above in this Section 1502 have been satisfied as to such Note (or portion thereof), and the Person in whose name any certificate or certificates for shares of Company Common Stock (or other securities issuable in respect of such conversion or payment as contemplated in Section 1504) shall be issuable upon such conversion or payment shall be deemed to have become on said date the holder of record of the shares represented thereby and such Holder shall be entitled to all of the rights of a record holder of Company Common Stock or other securities deliverable hereunder (all of which shall be and be deemed to be issued to such person) and such person shall be deemed to be the owner of such shares of Company Common Stock or other securities, whether or not certificates representing the same have been issued to such person. In the case of any conversion pursuant to Section 1501(a) any Note (or portion thereof) so surrendered shall cease to be outstanding and shall be discharged and all principal and accrued interest thereon extinguished in all respects as of the date of such surrender. In the case of any Demand Payment, each Note shall be discharged and extinguished as contemplated in Section 301(f). 78 No adjustment in respect of accrued interest on any Note converted or paid, or dividends on any shares issued upon conversion or payment of such Note will be made upon any conversion or payment. SECTION 1503. Stated Ratio. The "Stated Ratio" shall equal 65.90909 shares of Company Common Stock per $1,000 original principal amount of Notes. In the event of any transaction or occurrence not contemplated in Section 1504 in which it is equitable that the Stated Ratio be adjusted, then, upon the request and with the consent of the Requisite Lenders, and with the approval of the Board of Directors of the Company acting in good faith, the Stated Ratio shall be equitably adjusted. Any such adjustment shall be made by and set forth in a supplemental indenture between the Company, or any successor thereto, and the Trustee and shall for all purposes hereof conclusively be deemed to be an appropriate adjustment. SECTION 1504. Additional Issuances in the Event of Occurrence of Certain Events. In addition to or instead of the shares of Company Common Stock otherwise issuable upon conversion pursuant to this Article Fifteen or payment in respect of a Demand Payment in the form of Applicable Common Stock: (i) In case the Company shall, at any time after the date hereof and on or prior to (A) the date of such conversion as contemplated in Section 1501(a) in respect of any conversion or (B) the Demand Payment Date in respect of any Demand Payment (1) declare a dividend or make a distribution on the Company Common Stock in shares of Company Common Stock; (2) subdivide the outstanding shares of Company Common Stock into a greater number of shares; (3) combine the outstanding shares of its Company Common Stock into a smaller number of shares; or (4) issue any shares of its capital stock by reclassification of the Company Common Stock (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing corporation), then upon conversion or payment of a Note in respect of a Demand Payment in the form of Applicable Common Stock the Holder of such Note shall be entitled to receive the aggregate number and kind of shares which, if such Note had been converted or so paid immediately prior to such time, such Holder would have owned upon such conversion or payment, as applicable, and by virtue of such dividend, subdivision, combination, or reclassification. (ii) In case the Company shall, at any time after the date hereof and on or prior to (A) the date of such conversion as contemplated in Section 1501(a) in respect of any conversion or (B) the Demand Payment Date in respect of any Demand Payment, issue to all holders of Company Common Stock rights, options, or warrants to subscribe for or purchase Company Common Stock (or securities convertible into or exchangeable for Company Common Stock), and if the same are not issued or otherwise provided to the Holders of Notes at such time pro rata on a fully-diluted basis as if such Notes were then convertible or payable as contemplated herein, together with all warrants, other rights, options or convertible securities in respect of Company Common Stock, and as if all such securities were exercised or converted, then, upon conversion or Demand Payment of a Note in the form of Applicable Common Stock, the Holder of such Note so converted or so paid shall be entitled to receive the aggregate number and kind of rights, options, or warrants to subscribe for or purchase Company Common Stock (or securities convertible into or exchangeable for Company Common Stock) such holder would have received by virtue of such issuance of rights, options, or warrants to subscribe for or purchase Company Common Stock (or securities convertible into or 79 exchangeable for Company Common Stock), if such Note had been converted or paid in the form of Applicable Common Stock immediately prior to such time. (iii) For the avoidance of doubt, the exercise or conversion of any option, warrant or other convertible or similar security shall not be deemed to constitute a distribution, subdividion or issuance contemplated by Section 1504(i) and (ii) or otherwise require the issuance of any additional securities under Section 1504(i) or (ii) or otherwise in respect of, or upon, conversion of Notes or a Demand Payment. SECTION 1505. Mergers. In case of any consolidation or merger of the Company with or into another Person (other than a merger or consolidation in which the Company is the continuing corporation and which does not result in any reclassification of the outstanding shares of Company Common Stock or the conversion of such outstanding shares of Company Common Stock into shares of other stock or other securities or property) (such actions being hereinafter collectively referred to as a "Merger"), there shall thereafter be deliverable upon conversion or Demand Payment of any Note (in lieu of the securities otherwise deliverable as contemplated in this Article Fifteen and Section 301(f)), the number of shares of stock or other securities or property to which a holder of the number of shares of Company Common Stock which would otherwise have been deliverable upon the conversion or such payment of such Note would have been entitled upon such Merger if such Note had been converted or so paid in full immediately prior to such Merger. In case of any Merger, appropriate adjustment, as determined in good faith by the Board of Directors of the Company and consented to by the Requisite Lenders, shall be made in the application of the provisions herein set forth with respect to the rights and interests of Note holders so that the provisions set forth herein shall thereafter be applicable, as nearly as possible, in relation to any shares or other property thereafter deliverable upon conversion or Demand Payment of Notes. Any such adjustment shall be made by and set forth in a supplemental indenture between the Company, or any successor thereto, and the Trustee and shall for all purposes hereof conclusively be deemed to be an appropriate adjustment. The Company shall not effect any such Merger unless upon or prior to the consummation thereof the successor corporation, or if the Company shall be the surviving corporation in any such Merger and is not the issuer of the shares of stock or other securities or property to be delivered to holders of shares of the Company Common Stock outstanding at the effective time thereof, then such issuer, shall assume by written instrument the obligation to deliver to the registered holder of any Note such shares of stock, securities, cash, or other property as such holder shall be entitled to purchase in accordance with the foregoing provisions. SECTION 1506. Verification of Computations. Whenever the Stated Ratio is adjusted as provided pursuant to Section 1504 hereof, the Company will promptly obtain a certificate of the chief financial officer of the Company setting forth the Stated Ratio as so adjusted and a brief statement of the facts accounting for such adjustment, and the Company will make available a brief summary thereof to the holders of the Notes, at their addresses listed on the register maintained for that purpose by the Trustee. 80 SECTION 1507. Notice of Additional Issuances or Other Property. Whenever Holders of Notes become entitled to an additional issuance of securities or other property pursuant to this Article Fifteen, the Company shall cause notice of such matter to be mailed to the Trustee within 15 days thereafter, such notice to include in reasonable detail (a) the events precipitating such occurrence and (b) the computation of any such additional consideration, which computation shall include the number of shares or the securities or other property purchasable upon conversion or Demand Payment of each Note after giving effect thereto. The Trustee shall within 15 days after receipt of such notice from the Company cause a similar notice to be mailed to each registered holder of a Note. SECTION 1508. Fractional Shares. Upon the conversion or Demand Payment of any Note, all fractions will be rounded down to the nearest whole number of shares, and the Company shall not be required to issue fractional shares of Company Common Stock. If more than one Note is converted or paid in respect of any Demand Payment at one time by the same registered holder, the number of full shares of Company Common Stock which shall be deliverable shall be computed based on the number of shares deliverable in exchange for the aggregate principal amount of Notes converted or so paid. The Company shall not make any cash payments to holders of Notes with respect to any final fraction of a share called for upon the conversion or such payment of any Note. SECTION 1509. Taxes on Shares Issued. The issue of stock certificates on conversions or Demand Payment of Notes shall be made without charge to the Holder for any tax in respect of the issue thereof. The Company shall not, however, be required to pay any tax which may be payable in respect of any transfer involved in the issue and delivery of stock in any name other than that of the holder of any Note converted or so paid, and the Company shall not be required to issue or deliver any such stock certificate unless and until the Person or Persons requesting the issue thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid. SECTION 1510. Reservation of Shares; Shares to Be Fully Paid; Compliance with Governmental Requirements; Listing of Company Common Stock. The Company shall provide, free from preemptive rights, out of its authorized but unissued shares or shares held in treasury, sufficient shares of Company Common Stock to provide for the conversion or Demand Payment of the Notes from time to time as such Notes are presented for conversion or such payment. The Company covenants that, if any shares of Company Common Stock to be provided for the purpose of conversion or Demand Payment of Notes hereunder require registration with or approval of any governmental authority under any federal or state law before such shares may be validly issued upon conversion or Demand Payment, the Company will in good faith and as expeditiously as possible, to the extent then permitted by the rules and interpretations of the Securities and Exchange Commission (or any successor thereto), endeavor to secure such registration or approval, as the case may be. 81 The Company shall have no obligation to cause any securities to be listed on any national securities exchange or automated quotation system. SECTION 1511. Responsibility of Trustee. The Trustee and any other conversion agent shall not at any time be under any duty or responsibility to any holder of Notes to determine the Stated Ratio or whether any facts exist which may require any adjustment of the Stated Ratio, or with respect to the nature or extent or calculation of any such adjustment when made, or with respect to the method employed, or herein or in any supplemental indenture provided to be employed, in making the same. The Trustee and any other conversion or payment agent shall not be accountable with respect to the validity or value (or the kind or amount) of any shares of Company Common Stock, or of any securities or property, which may at any time be issued or delivered upon the conversion or Demand Payment of any Note; and the Trustee and any other conversion or payment agent make no representations with respect thereto. Neither the Trustee nor any conversion or payment agent shall be responsible for any failure of the Company to issue, transfer or deliver any shares of Company Common Stock or stock certificates or other securities or property or cash upon the surrender of any Note for the purpose of conversion or Demand Payment or to comply with any of the duties, responsibilities or covenants of the Company contained in this Article Fifteen. Without limiting the generality of the foregoing, neither the Trustee nor any conversion or payment agent shall be under any responsibility to determine the correctness of any provisions contained in any supplemental indenture entered into pursuant hereto relating either to the kind or amount of shares of stock or securities or property (including cash) receivable by Noteholders upon the conversion or Demand Payment of their Notes, but, subject to the provisions of Article Six, may accept as conclusive evidence of the correctness of any such provisions, and shall be protected in relying upon, the Officers' Certificate (which the Company shall be obligated to file with the Trustee prior to the execution of any such supplemental indenture) with respect thereto. ARTICLE SIXTEEN MISCELLANEOUS SECTION 1601. Counterparts. This Indenture may be signed in any number of counterparts each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same Indenture. 82 IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written. ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC. By /s/ Douglas S. Niethold -------------------------------------- Title: Vice President Finance, Chief Financial Officer and Principal Accounting Officer Attest: /s/ Patricia M. Wild -------------------------------------- Title: Vice President, General Counsel and Secretary ACE GAMING, LLC By /s/ Douglas S. Niethold ------------------------------------- Title: Vice President Finance, Chief Financial Officer and Principal Accounting Officer Attest: /s/ Patricia M. Wild -------------------------------------- Title: Vice President, General Counsel and Secretary WELLS FARGO BANK, NATIONAL ASSOCIATION By /s/ Jane Schweiger ------------------------------------- Title: Vice President 83 EXHIBIT A - ------------------------------------------------------------------------------- OFFICER'S CERTIFICATE OF ACE GAMING, LLC - ------------------------------------------------------------------------------- Reference is made to that certain Indenture, dated as of July 22, 2004 (the "Indenture") among Atlantic Coast Entertainment Holdings, Inc. (the "Company"), as Issuer, ACE Gaming, LLC, as guarantor, and Wells Fargo Bank, National Association, as Trustee (the "Trustee"). Except as otherwise defined herein, capitalized terms used herein shall have the meanings set forth in the Indenture. Pursuant to Section 1008 of the Indenture, the undersigned officer of Licensee hereby certifies to the Trustee as follows: He is now, and at the times mentioned herein has been, the duly elected, qualified and acting officer of Licensee as specified below. To his knowledge, and without regard to any period of grace or requirements of notice under the Indenture or the Security Documents, Licensee is in compliance with all conditions and covenants under the Indenture or the Security Documents. IN WITNESS WHEREOF, I have set my hand this ____ day of _____________. ACE GAMING, LLC T/A "SANDS HOTEL & CASINO" By: ---------------------------------- 84 SCHEDULE 1.01 PERMITTED INDEBTEDNESS Amendment, dated April 5, 2000, to Brighton Park Improvements Agreement, dated November 5, 1987, by and between Claridge at Park Place, Inc. and GBHC. Lease Agreement, dated April 17, 2000 between Claridge at Park Place, Inc. and GBHC for Lot 11 on Block 47 Tax Map of the City of Atlantic City Such liens or interests as are set forth in that certain ALTA Owners Policy of Title Insurance issued by Stewart Title Guaranty Company, Policy No. O9993-1390962 and that certain Commitment No. 102161060 for Title Insurance of Stewart Title Guaranty Company, but excluding any mortgage, obligations, or liabilities arising under or relating to the Amended and Restated Indenture, dated as of October 12, 2001, among GB Property Funding Corp., as issuer, GB Holdings, Inc. and Greate Bay Hotel and Casino, Inc., as guarantors, and Wells Fargo Bank, Minnesota, National Association, as trustee, any amendments thereto, or any documents related therewith. The lease, license or management agreement (s) with an energy management company(s), supplier(s), or intermediary(s) related thereto now or hereafter entered into concerning or with respect to the supply and/or management of utility services and/or the operation of existing or newly supplied equipment at the property, including, but not limited to heating, ventilation, and air-conditioning and energy production related equipment. The obligations of the Company or any of its Subsidiaries under existing leases of real property used in conjunction with the operations of the Company and its Subsidiaries. 85 EXHIBIT B CONVERSION NOTICE TO: ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC. AND WELLS FARGO BANK, NATIONAL ASSOCIATION The undersigned registered owner of this Note hereby irrevocably exercises the option to convert this Note, or the portion thereof (which is $1,000 or an integral multiple thereof) below designated, into shares of Common Stock of Atlantic Coast Entertainment Holdings, Inc.in accordance with the terms of the Indenture referred to in the Note below, and directs that the shares issuable and deliverable upon such conversion, and any Notes representing any unconverted principal amount hereof, be issued and delivered to the registered holder hereof unless a different name has been indicated below. If shares or any portion of this Note not converted are to be issued in the name of a person other than the undersigned, the undersigned will provide the appropriate information below and pay all transfer taxes payable with respect thereto. Any amount required to be paid by the undersigned on account of interest accompanies this Note. Dated: ___________________ Fill in the registration of shares of Common Stock if to be issued, and Notes if to be delivered, other than to and in the name of the registered holder: (Name) (Street Address) (City, State and Zip Code) Please print name and address Principal amount to be converted (if less than all): $------------------------- Social Security or Other Taxpayer Identification Number: Name of Registered Owner of Note being Converted: ___________________________ Principal Amount of Note being Converted: $ _________________________________ Certificate Number of Note being Converted: _________________________________ 86 EX-4.7 5 file005.txt WARRANT AGREEMENT WARRANT AGREEMENT BETWEEN ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC. AND AMERICAN STOCK TRANSFER AND TRUST COMPANY DATED AS OF JULY 22, 2004
TABLE OF CONTENTS PAGE ---- ARTICLE I DISTRIBUTION OF WARRANT CERTIFICATES........................................................... 1 Section 1.1 Appointment of Warrant Agent.................................................. 1 Section 1.2 Form of Warrant Certificates.................................................. 1 Section 1.3 Execution of Warrant Certificates............................................. 1 Section 1.4 Issuance and Distribution of Warrant Certificates............................. 2 Section 1.5 Conditions to Distribution of Warrant Certificates............................ 2 ARTICLE II WARRANT EXERCISE PRICE AND EXERCISE OF WARRANTS................................................ 2 Section 2.1 Exercise Price................................................................ 2 Section 2.2 Registration of Common Stock and Exercisability of Warrants................... 2 Section 2.3 Procedure for Exercise of Warrants............................................ 3 Section 2.4 Issuance of Common Stock...................................................... 3 Section 2.5 Certificates for Unexercised Warrants......................................... 3 Section 2.6 Reservation of Shares......................................................... 3 Section 2.7 Disposition of Proceeds....................................................... 3 Section 2.8 Cancellation of Warrants...................................................... 3 ARTICLE III ADDITIONAL SECURITIES AND NOTICE PROVISIONS.................................................... 4 Section 3.1 Additional Securities......................................................... 4 Section 3.2 Deferral of Adjustments to Warrant Shares..................................... 4 Section 3.3 Adjustment to Number of Warrant Shares........................................ 4 Section 3.4 Reorganizations............................................................... 4 Section 3.5 Verification of Computations.................................................. 5 Section 3.6 Exercise Price Not Less Than Par Value........................................ 5 Section 3.7 Notice of Certain Actions..................................................... 5 Section 3.8 Notice of Certain Actions..................................................... 5 Section 3.9 Warrant Certificate Amendments................................................ 5 Section 3.10 Fractional Shares............................................................. 5 Section 3.11 Current Market Price.......................................................... 6 Section 3.12 Right to Adjust Exercise Price and Exercise Deadline.......................... 6 ARTICLE IV OTHER PROVISIONS RELATING TO RIGHTS OF REGISTERED HOLDERS OF WARRANT CERTIFICATES............... 6 Section 4.1 Rights of Warrant Holders...................................................... 6 Section 4.2 Lost, Stolen, Mutilated, or Destroyed Warrant Certificates..................... 6 ARTICLE V SPLIT UP, COMBINATION, EXCHANGE, TRANSFER, AND CANCELLATION OF WARRANT CERTIFICATES............ 6 Section 5.1 Split Up, Combination, Exchange, and Transfer of Warrant Certificates......... 6 Section 5.2 Cancellation upon Surrender of Warrant Certificates........................... 7 Section 5.3 Agreement of Warrant Certificate Holders...................................... 7 ARTICLE VI PROVISIONS CONCERNING THE WARRANT AGENT AND OTHER MATTERS...................................... 7 Section 6.1 Payment of Taxes and Charges.................................................. 7 Section 6.2 Resignation or Removal of Warrant Agent....................................... 7 Section 6.3 Notice of Appointment......................................................... 8 Section 6.4 Merger of Warrant Agent....................................................... 8 Section 6.5 Company Responsibilities...................................................... 8 Section 6.6 Certification for the Benefit of Warrant Agent................................ 8 Section 6.7 Books and Records............................................................. 8 Section 6.8 Liability of Warrant Agent.................................................... 8 Section 6.9 Use of Attorneys, Agents, and Employees....................................... 9 Section 6.10 Indemnification............................................................... 9 Section 6.11 Acceptance of Agency.......................................................... 9 Section 6.12 Changes to Agreement.......................................................... 9 Section 6.13 Assignment.................................................................... 9 Section 6.14 Successor to Company.......................................................... 9 Section 6.15 Notices....................................................................... 9 Section 6.16 Defects in Notice............................................................. 10 Section 6.17 Governing Law................................................................. 10 Section 6.18 Standing...................................................................... 10 Section 6.19 Headings...................................................................... 10 Section 6.20 Counterparts.................................................................. 10 Section 6.21 Conflict of Interest.......................................................... 10 Section 6.22 Availability of the Agreement................................................. 11 EXHIBIT A FORM OF WARRANT CERTIFICATE
ii WARRANT AGREEMENT WARRANT AGREEMENT, dated as of July 22, 2004, between ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC., a Delaware corporation (the "Company") and American Stock Transfer and Trust Company, as warrant agent (the "Warrant Agent"). WITNESSETH: WHEREAS, the Company is a wholly owned subsidiary of GB Holdings, Inc., a Delaware corporation (the "Parent"); WHEREAS, the Company proposes to enter into the transaction (the "Transaction") described in that certain Proxy Statement and Registration Statement on Form S-4 (the "Form S-4") pursuant to which the Company shall distribute to the stockholders of Parent (the "Distribution") 10 million warrants (the "Warrants") to purchase common stock, par value $.01 per share the ("Common Stock") of the Company, each Warrant entitling the holder thereof to purchase .275 shares of Common Stock; WHEREAS, the Company proposes to issue certificates evidencing the Warrants (such Warrant certificates issued pursuant to this Agreement being hereinafter called the "Warrant Certificates"); WHEREAS, the Company desires the Warrant Agent, and the Warrant Agent agrees, to act on behalf of the Company in connection with the issuance, transfer, exchange, replacement, redemption, and surrender of the Warrant Certificates; and WHEREAS, the Company and the Warrant Agent desire to set forth in this Warrant Agreement, among other things, the form and provisions of the Warrant Certificates and the terms and conditions under which they may be issued, transferred, exchanged, replaced, redeemed, and surrendered in connection with the exercise and redemption of the Warrants; NOW, THEREFORE, in consideration of the premises and of the mutual agreements herein contained, the parties hereto agree as follows: ARTICLE I DISTRIBUTION OF WARRANT CERTIFICATES Section 1.1 Appointment of Warrant Agent. The Company hereby appoints the Warrant Agent to act on behalf of the Company in accordance with the instructions hereinafter set forth, and the Warrant Agent hereby accepts such appointment. Section 1.2 Form of Warrant Certificates. The Warrant Certificates shall be issued in registered form only and, together with the purchase and assignment forms to be printed on the reverse thereof, shall be substantially in the form of Exhibit A attached hereto. The Warrant Certificates may have such letters, numbers, or other marks of identification or designation and such legends, summaries, or endorsements stamped, printed, lithographed, or engraved thereon as the Company may deem appropriate and as are not inconsistent with the provisions of this Agreement or as, in any particular case, may be required, in the opinion of counsel for the Company, to comply with any law or with any rule or regulation of any regulatory authority or agency, or to conform to customary usage. Section 1.3 Execution of Warrant Certificates. The Warrant Certificates shall be executed on behalf of the Company by its Chairman, Vice Chairman, President, or any Vice President and by its Chief Financial Officer, Treasurer, Assistant Treasurer, Secretary, or Assistant Secretary, either manually or by facsimile signature printed thereon. The Warrant Certificates shall be manually countersigned and dated the date of countersignature by the Warrant Agent and shall not be valid for any purpose unless so countersigned and dated. If any authorized officer of the Company who shall have signed any of the Warrant Certificates shall cease to be such officer of the Company either before or after delivery thereof by the Company to the Warrant Agent, the signature of such person on such Warrant Certificates nevertheless shall be valid and such Warrant Certificates may be countersigned by the Warrant Agent and issued and delivered to those persons entitled to receive the Warrants represented thereby with the same force and effect as though the person who signed such Warrant Certificates had not ceased to be such officer of the Company. Section 1.4 Issuance and Distribution of Warrant Certificates. Upon completion of the Distribution, the Company shall deliver to the Warrant Agent an adequate supply of Warrant Certificates executed on behalf of the Company as described in Section 1.3 hereof. Upon receipt of an order from the Company, the Warrant Agent shall within three business days complete and countersign Warrant Certificates representing the total number of Warrants to be issued hereunder and shall deliver such Warrant Certificates pursuant to written instructions of the Company. Section 1.5 Conditions to Distribution of Warrant Certificates. If the Distribution or the Transaction is not consummated for any reason, no Warrant Certificates shall be distributed and this Agreement shall terminate and be of no further force or effect. ARTICLE II WARRANT EXERCISE PRICE AND EXERCISE OF WARRANTS Section 2.1 Exercise Price. Each Warrant Certificate shall, when signed by the Chairman, Vice Chairman, President, or any Vice President and by the Chief Financial Officer, Treasurer, Assistant Treasurer, Secretary, or Assistant Secretary of the Company and countersigned by the Warrant Agent, entitle the registered holder thereof to purchase from the Company .275 shares (each a "Warrant Share") of Common Stock for each Warrant evidenced thereby, at the purchase price of $.01 per share, or such adjusted number of shares at such adjusted purchase price as may be established from time to time pursuant to the provisions of Article III hereof, payable in full at the time of exercise of the Warrant. Except as the context otherwise requires, the term "Exercise Price" as used in this Agreement shall mean the purchase price of $.01 per share of Common Stock upon exercise of a Warrant, reflecting all appropriate adjustments made in accordance with the provisions of Article III hereof. Section 2.2 Registration of Common Stock and Exercisability of Warrants. Each Warrant may be exercised at any time after the earliest to occur of the following events (the first date on which any such event occurs being referred to as the "Vesting Date"): 2 (a) the payment of the entire principal amount and accrued interest on any of the Company's outstanding 3% Notes due 2008 issued by the Company (the "New Notes"), pursuant to and in accordance with the terms thereof whether such payment is in the form of cash or by issuance of shares of Common Stock to the holder thereof in lieu of cash payment or any conversion of any of such notes into common stock pursuant to and in accordance with the terms thereof; (b) a determination by a majority of the board of directors of the Company (the "Board") (including at least one independent director) that the Warrants may be exercised; and (c) payment in full by the Parent of principal and accrued, but unpaid interest on all outstanding 11% Notes due 2005 issued by the Parent which have not been exchanged for the New Notes in the Transaction. Promptly after the Vesting Date, the Company shall send written notice to the Warrant Agent that such Vesting Date has occurred (the "Vesting Notice"). The Warrant Agent shall within ten days after receipt of the Vesting Notice cause a similar notice to be mailed to each registered holder of a Warrant Certificate. The latest time and date at which the Warrants may be exercised (the "Exercise Deadline") shall be 5:00 P.M. New York City time on the earlier of (i) the date that is the seventh anniversary of the completion of the Distribution; or (ii) the Cancellation Date (as defined in Section 2.8 below). The Company shall use its reasonable efforts to secure the effective registration of the Warrant Shares under the Securities Act of 1933, as amended (the "Securities Act"), and register or qualify such shares under applicable state laws; provided, however, that the Company shall have no obligation to register the Warrant Shares in the event that, by amendment to the Securities Act or otherwise, such registration or qualification or the delivery of such prospectus is not required at the time said Warrant Shares are to be issued; and further that, if by amendment to the Securities Act or otherwise, some other or different requirement shall be imposed by act of the Congress of the United States which shall relate to the issuance of the Warrant Shares upon exercise of the Warrants, the Company shall use its reasonable efforts to comply with such requirements so long as the same shall not be more burdensome to the Company than the registration statement under the Securities Act. Promptly after a registration statement under the Securities Act covering the aforementioned Warrant Shares has become effective, or such other action as contemplated hereby and as may be required has been taken, as the case may be, the Company shall cause notice thereof or a copy of the prospectus covering the Warrant Shares to be mailed to each registered holder of a Warrant Certificate. Section 2.3 Procedure for Exercise of Warrants. During the period specified in and subject to the provisions of Section 2.2 hereof, Warrants may be exercised by surrendering the Warrant Certificates representing such Warrants to the Warrant Agent at the principal office of its corporate trust department (the "Principal Office"), which is presently at 59 Maiden Lane Plaza Level, New York, NY 10038, with the election to purchase form set forth on the Warrant Certificate duly completed and executed, with medallion signatures guaranteed by a member of a medallion guarantee program ("Signatures Guaranteed"), accompanied by payment in full of the Exercise Price as provided for in Section 2.1 hereof in effect at the time of such exercise, together with such taxes as are specified in Section 6.1 hereof, for each Warrant Share with 3 respect to which such Warrant is being exercised. Such Exercise Price and taxes shall be paid in full by certified check or money order, payable in United States currency to the order of the Company. The date on which Warrants are exercised in accordance with this Section 2.3 is sometimes referred to herein as the "Date of Exercise" of such Warrants. Section 2.4 Issuance of Common Stock. As soon as practicable after the Date of Exercise of any Warrants, the Company shall issue, or cause the transfer agent for the Common Stock, if any, to issue, a certificate or certificates for the number of full shares of Common Stock to which such holder is entitled, registered in accordance with the instructions set forth in the election to purchase. All Warrant Shares shall be validly authorized and issued, fully paid, and nonassessable, and free from all taxes, liens, and charges created by the Company in respect of the issue thereof. Each person in whose name any such certificate for shares of Common Stock is issued shall for all purposes be deemed to have become the holder of record of the Common Stock represented thereby on the Date of Exercise of the Warrants resulting in the issuance of such shares, irrespective of the date of issuance or delivery of such certificate for shares of Common Stock. Section 2.5 Certificates for Unexercised Warrants. If less than all of the Warrants represented by a Warrant Certificate are exercised, the Warrant Agent shall execute and mail, by first-class mail, within 30 days of the Date of Exercise, to the registered holder of such Warrant Certificate, or such other person as shall be designated in the election to purchase, a new Warrant Certificate representing the number of full Warrants not exercised. In no event shall a fraction of a Warrant be exercised, and the Warrant Agent shall distribute no Warrant Certificates representing fractions of Warrants under this or any other section of this Agreement. Final fractions of shares shall be treated as provided in Section 3.11 hereof. Section 2.6 Reservation of Shares. The Company shall at all times reserve and keep available for issuance upon the exercise of Warrants a number of its authorized but unissued shares of Common Stock that will be sufficient to permit the exercise in full of all outstanding Warrants. Section 2.7 Disposition of Proceeds. The Warrant Agent shall account promptly to the Company with respect to Warrants exercised and concurrently deliver to the Company all proceeds from such exercise. Section 2.8 Cancellation of Warrants. At any time after the Vesting Date, the Company by action of the Board, may at its option, cancel all, but not less than all of the Warrants provided that the Company is in compliance with its obligations under Section 2.2 hereof to register the Warrant Shares under the Securities Act. Notice of such cancellation shall be promptly given to the Warrant Agent by the Company and such notice (the "Cancellation Notice") shall be mailed to all registered holders of Warrant Certificates, specifying a date (the "Cancellation Date") established by the Board which shall be at least 90 days after the date of such notice. The Cancellation Notice will specify the Cancellation Date and will also state that the right to exercise the Warrants will terminate at 5:00 p.m., New York City time on the Cancellation Date. The Company will also make a prompt public announcement of the determination by the Board of the Cancellation Date by news release and by notice to any national securities exchange on which the Warrants are listed for trading. 4 ARTICLE III ADDITIONAL SECURITIES AND NOTICE PROVISIONS Section 3.1 Additional Securities. In addition to the Warrant Shares issuable upon the exercise of this Warrant as contemplated in Section 2.1 above: (a) In case the Company shall, at any time after the date hereof and on or prior to the Date of Exercise (i) declare a dividend or make a distribution on the Common Stock in shares of the Common Stock, (ii) subdivide the outstanding shares of the Common Stock into a greater number of shares, (iii) combine the outstanding shares of its Common Stock into a smaller number of shares, or (iv) issue any shares of its capital stock by reclassification of the Common Stock (including any such reclassification in connection with a consolidation or merger of the Company), then upon the exercise of a Warrant the holder of such Warrant shall be entitled to receive the aggregate number and kind of shares which, if such Warrant had been exercised immediately prior to such time, such holder would have been entitled to receive by virtue of such dividend, subdivision, combination, or reclassification. (b) In case the Company shall, at any time after the date hereof and on or prior to the Date of Exercise, issue to all holders of the Common Stock rights, options, or warrants to subscribe for or purchase the Common Stock (or securities convertible into or exchangeable for the Common Stock), and if the same are not issued or otherwise provided to the holders of Warrants at such time pro rata on a fully-diluted basis as if all warrants, other rights, options or convertible securities in respect of Common Stock, and as if all such securities were exercised or paid, then upon the exercise of the Warrant, the holder of such Warrant exercised shall be entitled to receive the aggregate number and kind of rights, options, or warrants to subscribe for or purchase the Common Stock (or securities convertible into or exchangeable for the Common Stock) which if, such holder would have received by virtue of such issuance of rights, options, or warrants to subscribe for or purchase the Common Stock (or securities convertible into or exchangeable for the Common Stock), if such Warrant had been exercised immediately prior to such time. Section 3.2 Deferral of Adjustments to Warrant Shares. In any case in which this Article III shall require that an adjustment in the Warrant Shares be made effective as of a record date for a specified event, the Company may elect to defer, until the occurrence of such event, issuing to the holders of the Warrants, if any holder has exercised a Warrant after such record date, the shares of Common Stock, if any, issuable upon such exercise over and above the Warrant Shares; provided, however, that the Company shall deliver to such exercising holder a due bill or other appropriate instrument evidencing such holder's right to receive such additional shares upon the occurrence of the event requiring such adjustment. All calculations under this Article III shall be made to the nearest cent or one-hundredth of a share, as the case may be. Section 3.3 Adjustment to Number of Warrant Shares. Upon each action set forth in Section 3.1 that requires an adjustment in the number of Warrant Shares, each Warrant shall thereupon evidence the right to purchase that number of Warrant Shares (calculated to the nearest hundredth of a share) obtained by multiplying the number of shares of Common Stock 5 purchasable immediately prior, after giving effect to Section 3.1, to such adjustment upon exercise of the Warrant by the Exercise Price in effect immediately prior to such adjustment. Section 3.4 Reorganizations. In case of any consolidation or merger of the Company with or into another corporation (other than a merger or consolidation in which the Company is the continuing corporation and which does not result in any reclassification of the outstanding shares of Common Stock or the conversion of such outstanding shares of Common Stock into shares of other stock or other securities or property) (such actions being hereinafter collectively referred to as "Mergers"), there shall thereafter be deliverable upon exercise of any Warrant (in lieu of the number of shares of Common Stock theretofore deliverable) the number of shares of stock or other securities or property to which a holder of the number of shares of Common Stock which would otherwise have been deliverable upon the exercise of such Warrant would have been entitled upon such Merger if such Warrant had been exercised in full immediately prior to such Merger. In case of any Merger, appropriate adjustment, as determined in good faith by the Board shall be made in the application of the provisions herein set forth with respect to the rights and interests of Warrant holders so that the provisions set forth herein shall thereafter be applicable, as nearly as possible, in relation to any shares or other property thereafter deliverable upon exercise of Warrants. Any such adjustment shall be made by and set forth in a supplemental agreement between the Company, or any successor thereto, and the Warrant Agent and shall for all purposes hereof conclusively be deemed to be an appropriate adjustment. The Company shall not effect any such Merger unless upon or prior to the consummation thereof the successor corporation, or if the Company shall be the surviving corporation in any such Merger and is not the issuer of the shares of stock or other securities or property to be delivered to holders of shares of the Common Stock outstanding at the effective time thereof, then such issuer, shall assume by written instrument the obligation to deliver to the registered holder of any Warrant Certificate such shares of stock, securities, cash, or other property as such holder shall be entitled to purchase in accordance with the foregoing provisions. Section 3.5 Verification of Computations. Whenever the Warrant Shares are adjusted as provided pursuant to Section 3.1 hereof, the Company will promptly obtain a certificate of a firm of independent public accountants of recognized standing selected by the Board (who may be the regular auditors of the Company) setting forth the Warrant Shares as so adjusted and a brief statement of the facts accounting for such adjustment, and will make available a brief summary thereof to the holders of the Warrant Certificates, at their addresses listed on the register maintained for that purpose by the Warrant Agent. Section 3.6 Exercise Price Not Less Than Par Value. In no event shall the Exercise Price be adjusted below the par value per share of the Common Stock. Section 3.7 Notice of Certain Actions. In the event the Company shall publicly announce its intention to: (a) pay any dividend or make any distribution on shares of Common Stock in shares of Common Stock or make any other distribution (other than regularly scheduled cash dividends which are not in an amount per share greater than the most recent such cash dividend) to all holders of Common Stock; 6 (b) issue any rights, warrants, or other securities to all holders of Common Stock entitling them to purchase any additional shares of Common Stock or any other rights, warrants, or other securities; (c) effect any reclassification of its Common Stock (other than a reclassification involving merely the subdivision or combination of outstanding shares of Common Stock) or Merger (other than a merger in which no distribution of securities or other property is made to holders of Common Stock); or (d) take any other action which would result in the issuance of additional consideration to the holders of Warrants; then, in each such case, the Company shall cause notice of such proposed action to be mailed to the Warrant Agent. Such notice shall specify the date on which the books of the Company shall close, or a record be taken, for determining holders of Common Stock entitled to receive such stock dividend or other distribution or such rights or options, or the date on which such reclassification, reorganization, consolidation, merger, sale, transfer, other disposition, liquidation, dissolution, winding up, or exchange or other action shall take place or commence, as the case may be, and the date as of which it is expected that holders of record of Common Stock shall be entitled to receive securities or other property deliverable upon such action, if any such date has been fixed. The Company shall cause copies of such notice to be mailed to each registered holder of a Warrant Certificate not later than 30 days after such action. Section 3.8 Notice of Certain Actions. Whenever any additional consideration or adjustment is required to be made pursuant to this Article III, the Company shall cause notice of same to be mailed to the Warrant Agent within 15 days thereafter, such notice to include in reasonable detail (a) the events precipitating the adjustment, (b) the computation of any such adjustment, and (c) the Exercise Price and the number of shares or the securities or other property purchasable upon exercise of each Warrant, after giving effect thereto. The Warrant Agent shall within 15 days after receipt of such notice from the Company cause a similar notice to be mailed to each registered holder of a Warrant Certificate. Section 3.9 Warrant Certificate Amendments. Irrespective of any adjustments pursuant to this Article III, Warrant Certificates theretofore or thereafter issued need not be amended or replaced, but certificates thereafter issued shall bear an appropriate legend or other notice of any adjustments. Section 3.10 Fractional Shares. The Company shall not be required upon the exercise of any Warrant to issue fractional shares of Common Stock which may result from adjustments in accordance with this Article III to the Exercise Price or number of shares of Common Stock purchasable under each Warrant. If more than one Warrant is exercised at one time by the same registered holder, the number of full shares of Common Stock which shall be deliverable shall be computed based on the number of shares deliverable in exchange for the aggregate number of Warrants exercised. With respect to any final fraction of a share called for upon the exercise of any Warrant or Warrants, the Company shall pay a cash adjustment in respect of such final fraction in an amount equal to the same fraction of the Current Market Price (as defined below) of a share of Common Stock calculated in accordance with Section 3.12 hereof. Section 3.11 Current Market Price. The "Current Market Price" per share at any date shall be the average of the "closing prices" for the 30 consecutive trading days ending on the trading 7 day immediately preceding the date in question, where the "closing price" on any day is (a) the last reported sales price regular way, in either case on the principal national securities exchange on which the Common Stock is listed or admitted to trading (including, for purposes hereof, the Nasdaq National Market), if on such date the Common Stock is not listed or admitted to trading on any national securities exchange, the highest reported bid price for the Common Stock as furnished by the National Association of Securities Dealers, Inc. through Nasdaq or a similar organization if Nasdaq is no longer reporting such information, or (c) if on such date the Common Stock is not listed or admitted to trading on any national securities exchange and is not quoted by Nasdaq or any similar organization, as determined by reference to the "pink sheets" published by National Quotation Bureau or, if not so published, by such other method of determining market value as the Board shall in good faith from time to time deem to be fair and such other method shall be conclusive. Section 3.12 Right to Adjust Exercise Price and Exercise Deadline. The Company may at any time, by notice to the Warrant Agent, reduce the Exercise Price to such price, or extend the Exercise Deadline to such date, as the Company may set forth in such notice or, following the Vesting Date, upon receipt of the aggregate exercise price for all outstanding Warrants, deem all such Warrants to have been exercised. Any such reduction shall remain in effect for such period as may be set forth in such notice. The Warrant Agent shall promptly after receipt of any such notice from the Company cause a similar notice to be mailed to each registered holder of a Warrant Certificate. ARTICLE IV OTHER PROVISIONS RELATING TO RIGHTS OF REGISTERED HOLDERS OF WARRANT CERTIFICATES Section 4.1 Rights of Warrant Holders. No Warrant Certificate shall entitle the registered holder thereof to any of the rights of a stockholder of the Company, including without limitation the right to vote, to receive dividends and other distributions, or to receive any notice of, or to attend, meetings of stockholders or any other proceedings of the Company. Section 4.2 Lost, Stolen, Mutilated, or Destroyed Warrant Certificates. If any Warrant Certificate shall be mutilated, lost, stolen, or destroyed, the Company in its discretion may direct the Warrant Agent to execute and deliver, in exchange and substitution for and upon cancellation of a mutilated Warrant Certificate, or in lieu of or in substitution for a lost, stolen, or destroyed Warrant Certificate, a new Warrant Certificate for the number of Warrants represented by the Warrant Certificate so mutilated, lost, stolen, or destroyed but only upon receipt of evidence of such loss, theft, or destruction of such Warrant Certificate, and of the ownership thereof, and indemnity, if requested, all satisfactory to the Company and the Warrant Agent. Applicants for such substitute Warrant Certificates shall also comply with such other reasonable regulations and pay such other reasonable charges incidental thereto as the Company or the Warrant Agent may prescribe. Any such new Warrant Certificate shall constitute an original contractual obligation of the Company, whether or not the allegedly lost, stolen, mutilated, or destroyed Warrant Certificate shall be at any time enforceable by anyone. 8 ARTICLE V SPLIT UP, COMBINATION, EXCHANGE, TRANSFER, AND CANCELLATION OF WARRANT CERTIFICATES Section 5.1 Split Up, Combination, Exchange, and Transfer of Warrant Certificates. Prior to the Exercise Deadline, Warrant Certificates, subject to the provisions of Section 5.2, may be split up, combined, or exchanged for other Warrant Certificates representing a like aggregate number of Warrants or may be transferred in whole or in part. Any holder desiring to split up, combine, or exchange a Warrant Certificate or Warrant Certificates shall make such request in writing delivered to the Warrant Agent at its Principal Office and shall surrender the Warrant Certificate or Warrant Certificates so to be split up, combined, or exchanged at said office. Subject to any applicable laws, rules, or regulations restricting transferability, any restriction on transferability that may appear on a Warrant Certificate in accordance with the terms hereof, or any "stop-transfer" instructions the Company may give to the Warrant Agent to implement any such restrictions (which instructions the Company is expressly authorized to give), transfer of outstanding Warrant Certificates may be effected by the Warrant Agent from time to time upon the books of the Company to be maintained by the Warrant Agent for that purpose, upon a surrender of the Warrant Certificate to the Warrant Agent at its Principal Office, with the assignment form set forth in the Warrant Certificate duly executed and with Signatures Guaranteed. Upon any such surrender for split up, combination, exchange, or transfer, the Warrant Agent shall execute and deliver to the person entitled thereto a Warrant Certificate or Warrant Certificates, as the case may be, as so requested. The Warrant Agent shall not be required to effect any split up, combination, exchange, or transfer which will result in the issuance of a Warrant Certificate evidencing a fraction of a Warrant. The Warrant Agent may require the holder to pay a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any split up, combination, exchange, or transfer of Warrant Certificates prior to the issuance of any new Warrant Certificate. Section 5.2 Cancellation upon Surrender of Warrant Certificates. Any Warrant Certificate surrendered upon the exercise of Warrants or for split up, combination, exchange, or transfer, or purchased or otherwise acquired by the Company, shall be cancelled and shall not be reissued by the Company; and, except as provided in Section 2.5 hereof in case of the exercise of less than all of the Warrants evidenced by a Warrant Certificate or in Section 5.1 hereof in case of a split up, combination, exchange, or transfer, no Warrant Certificate shall be issued hereunder in lieu of such cancelled Warrant Certificate. Any Warrant Certificate so cancelled shall be destroyed by the Warrant Agent unless otherwise directed by the Company. Section 5.3 Agreement of Warrant Certificate Holders. Every holder of a Warrant Certificate by accepting the same consents and agrees with the Company and the Warrant Agent and with every other holder of a Warrant Certificate that: (a) transfer of the Warrant Certificates shall be registered on the books of the Company maintained for that purpose by the Warrant Agent only if surrendered at the Principal Office of the Warrant Agent, duly endorsed or accompanied by a proper instrument of transfer, with Signatures Guaranteed; and (b) prior to due presentment for registration of transfer, the Company and the Warrant Agent may deem and treat the person in whose name the Warrant Certificate is 9 registered as the absolute owner thereof and of the Warrants evidenced thereby (notwithstanding any notations of ownership or writing on the Warrant Certificates made by anyone other than the Company or the Warrant Agent) for all purposes whatsoever, and neither the Company nor the Warrant Agent shall be affected by any notice to the contrary. ARTICLE VI PROVISIONS CONCERNING THE WARRANT AGENT AND OTHER MATTERS Section 6.1 Payment of Taxes and Charges. The Company will from time to time promptly pay to the Warrant Agent, or make provisions satisfactory to the Warrant Agent for the payment of, all taxes and charges that may be imposed by the United States or any state upon the Company or the Warrant Agent in connection with the issuance or delivery of shares of Common Stock upon the exercise of any Warrants, but any transfer taxes in connection with the issuance of Warrant Certificates or certificates for shares of Common Stock in any name other than that of the registered holder of the Warrant Certificate surrendered shall be paid by such registered holder; and, in such case, the Company shall not be required to issue or deliver any Warrant Certificate or certificate for shares of Common Stock until such taxes shall have been paid or it has been established to the Company's satisfaction that no tax is due. Section 6.2 Resignation or Removal of Warrant Agent. The Warrant Agent may resign its duties and be discharged from all further duties and liabilities hereunder after giving 30 days notice in writing to the Company, except that such shorter notice may be given as the Company shall, in writing, accept as sufficient. Upon comparable notice to the Warrant Agent, the Company may remove the Warrant Agent; provided, however, that in such event the Company shall appoint a new Warrant Agent, as hereinafter provided, and the removal of the Warrant Agent shall not be effective until a new Warrant Agent has been appointed and has accepted such appointment. If the office of Warrant Agent becomes vacant by resignation or incapacity to act or otherwise, the Company shall appoint in writing a new Warrant Agent. If the Company shall fail to make such appointment within a period of 30 days after it has been notified in writing of such resignation or incapacity by the resigning or incapacitated Warrant Agent or by the registered holder of any Warrant Certificate, then the registered holder of any Warrant Certificate may apply to any court of competent jurisdiction for the appointment of a new Warrant Agent. Any new Warrant Agent appointed hereunder shall execute, acknowledge, and deliver to the former Warrant Agent last in office, and to the Company, an instrument accepting such appointment under substantially the same terms and conditions as are contained herein, and thereupon such new Warrant Agent without any further act or deed shall become vested with the rights, powers, duties, and responsibilities of the Warrant Agent and the former Warrant Agent shall cease to be the Warrant Agent; but if for any reason it becomes necessary or expedient to have the former Warrant Agent execute and deliver any further assurance, conveyance, act, or deed, the same shall be done at the expense of the Company and shall be legally and validly executed and delivered by the former Warrant Agent. Section 6.3 Notice of Appointment. Not later than the effective date of the appointment of a new Warrant Agent the Company shall cause notice thereof to be mailed to the former Warrant 10 Agent and the transfer agent for the Common Stock, and shall forthwith cause a copy of such notice to be mailed to each registered holder of a Warrant Certificate. Failure to mail such notice, or any defect contained therein, shall not affect the legality or validity of the appointment of the successor Warrant Agent. Section 6.4 Merger of Warrant Agent. Any company into which the Warrant Agent may be merged or with which it may be consolidated, or any company resulting from any merger or consolidation to which the Warrant Agent shall be a party, shall be the successor Warrant Agent under this Agreement without further act, provided that such company would be eligible for appointment as a successor Warrant Agent under the provisions of Section 6.2 hereof. Any such successor Warrant Agent may adopt the prior countersignature of any predecessor Warrant Agent and distribute Warrant Certificates countersigned but not distributed by such predecessor Warrant Agent, or may countersign the Warrant Certificates in its own name. Section 6.5 Company Responsibilities. The Company agrees that it shall (a) pay the Warrant Agent reasonable remuneration for its services as Warrant Agent hereunder and will reimburse the Warrant Agent upon demand for all expenses, advances, and expenditures that the Warrant Agent may reasonably incur in the execution of its duties hereunder (including fees and expenses of its counsel); and (b) perform, execute, acknowledge, and deliver or cause to be performed, executed, acknowledged, and delivered all further and other acts, instruments, and assurances as may reasonably be required by the Warrant Agent for the carrying out or performing by the Warrant Agent of the provisions of this Agreement. Section 6.6 Certification for the Benefit of Warrant Agent. Whenever in the performance of its duties under this Agreement the Warrant Agent shall deem it necessary or desirable that any matter be proved or established or that any instructions with respect to the performance of its duties hereunder be given by the Company prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established, or such instructions may be given, by a certificate or instrument signed by the Chairman, any Vice Chairman, the President, any Vice President, the Secretary, any Assistant Secretary, the Chief Financial Officer, Treasurer, or any Assistant Treasurer of the Company and delivered to the Warrant Agent. Such certificate or instrument may be relied upon by the Warrant Agent for any action taken or suffered in good faith by it under the provisions of this Agreement; but in its discretion the Warrant Agent may in lieu thereof accept other evidence of such matter or may require such further or additional evidence as it may deem reasonable. Section 6.7 Books and Records. The Warrant Agent shall maintain the Company's books and records for registration and registration of transfer of the Warrant Certificates issued hereunder. Such books shall show the names and addresses of the respective holders of the Warrant Certificates, the number of Warrants evidenced on its face by each Warrant Certificate, and the date of each Warrant Certificate. Section 6.8 Liability of Warrant Agent. The Warrant Agent shall be liable hereunder for its own negligence or willful misconduct. The Warrant Agent shall act hereunder solely as an agent for the Company and its duties shall be determined solely by the provisions hereof. The Warrant Agent shall not be liable for or by reason of any of the statements of fact or recitals contained in this Agreement or in the Warrant Certificates (except its countersignature thereof) or be required 11 to verify the same, but all such statements and recitals are and shall be deemed to have been made by the Company only. The Warrant Agent will not incur any liability or responsibility to the Company or to any holder of any Warrant Certificate for any action taken, or any failure to take action, in reliance on any notice, resolution, waiver, consent, order, certificate, or other paper, document, or instrument reasonably believed by the Warrant Agent to be genuine and to have been signed, sent, or presented by the proper party or parties. The Warrant Agent shall not be under any responsibility in respect of the validity of this Agreement or the execution and delivery hereof by the Company or in respect of the validity or execution of any Warrant Certificate (except its countersignature thereof); nor shall it be responsible for any breach by the Company of any covenant or condition contained in this Agreement or in any Warrant Certificate; nor shall it be responsible for the making of any adjustment required under the provisions of Article III hereof or responsible for the manner, method, or amount of any such adjustment or the facts that would require any such adjustment; nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any shares of Common Stock or other securities to be issued pursuant to this Agreement or any Warrant Certificate or as to whether any shares of Common Stock or other securities will when issued be validly authorized and issued and fully paid and nonassessable. Section 6.9 Use of Attorneys, Agents, and Employees. The Warrant Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself or by or through its attorneys, agents, or employees. Section 6.10 Indemnification. The Company agrees to indemnify the Warrant Agent and save it harmless against any and all losses, expenses, or liabilities, including judgments, costs, and counsel fees arising out of or in connection with its agency under this Agreement, except as a result of the negligence or willful misconduct of the Warrant Agent. Section 6.11 Acceptance of Agency. The Warrant Agent hereby accepts the agency established by this Agreement and agrees to perform the same upon the terms and conditions herein set forth. Section 6.12 Changes to Agreement. The Warrant Agent may, without the consent or concurrence of any registered holder of a Warrant Certificate, by supplemental agreement or otherwise, join with the Company in making any changes or corrections in this Agreement that they shall have been advised by counsel (a) are required to cure any ambiguity or to correct any defective or inconsistent provision or clerical omission or mistake or manifest error herein contained, (b) add to the covenants and agreements of the Company or the Warrant Agent in this Agreement such further covenants and agreements thereafter to be observed, or (c) result in the surrender of any right or power reserved to or conferred upon the Company or the Warrant Agent in this Agreement, but which changes or corrections do not or will not adversely affect, alter, or change the rights, privileges, or immunities of the registered holders of Warrant Certificates. Section 6.13 Assignment. All the covenants and provisions of this Agreement by or for the benefit of the Company or the Warrant Agent shall bind and inure to the benefit of their respective successors and assigns. Section 6.14 Successor to Company. The Company will not merge or consolidate with or into any other corporation or sell or otherwise transfer its property, assets, and business substantially as an entirety to a successor corporation unless the corporation resulting from such 12 merger, consolidation, sale, or transfer (if not the Company) shall expressly assume, by supplemental agreement satisfactory in form and substance to the Warrant Agent and delivered to the Warrant Agent, the due and punctual performance and observance of each and every covenant and condition of this Agreement to be performed and observed by the Company. Section 6.15 Notices. Any notice or demand required by this Agreement to be given or made by the Warrant Agent or by the registered holder of any Warrant Certificate to or on the Company shall be sufficiently given if made in writing and shall be mailed by certified mail, return receipt requested or sent by Federal Express, Express Mail, or similar overnight delivery or courier service or delivered (in person or by telecopy, telex, or similar telecommunications equipment) against receipt to the party to whom it is to be given as follows: if to the Company: Atlantic Coast Entertainment Holdings, Inc. c/o Sands Hotel & Casino Indiana Avenue & Brighton Park Atlantic City, New Jersey 08401 Phone: (609) 441-4432 Attention: Douglas S. Niethold. If to the Warrant Agent: American Stock Transfer and Trust Company 59 Maiden Lane Plaza Level New York, NY 10038 Phone: 1-800-937-5449 Attention: Office of General Counsel Any notice or demand required by this Agreement to be given or made by the Company or the Warrant Agent to or on the registered holder of any Warrant Certificate shall be sufficiently given or made, whether or not such holder receives the notice, if sent by first-class or registered mail, postage prepaid, addressed to such registered holder at his last address as shown on the books of the Company maintained by the Warrant Agent. Otherwise such notice or demand shall be deemed given when received by the party entitled thereto. Section 6.16 Defects in Notice. Failure to file any certificate or notice or to mail any notice, or any defect in any certificate or notice pursuant to this Agreement, shall not affect in any way the rights of any registered holder of a Warrant Certificate or the legality or validity of any adjustment made pursuant to Section 3.1 hereof, or any transaction giving rise to any such adjustment, or the legality or validity of any action taken or to be taken by the Company. Section 6.17 Governing Law. This Agreement and the Warrant Certificates shall be governed by and construed in accordance with the laws of the State of New York, without regard 13 to principles of conflicts of law. Each of the parties submits to the jurisdiction of the federal courts whose districts encompass any part of the City of New York or the state courts of the State of New York sitting in the City of New York in connection with any dispute arising under this Agreement or any of the transactions contemplated hereby, and hereby waives, to the maximum extent permitted by law, any objection, including an objections based on forum non conveniens, to the bringing of any such proceeding in such jurisdictions. Section 6.18 Standing. Nothing in this Agreement expressed and nothing that may be implied from any of the provisions hereof is intended, or shall be construed, to confer upon, or give to, any person or corporation other than the Company, the Warrant Agent, and the registered holders of the Warrant Certificates any right, remedy, or claim under or by reason of this Agreement or of any covenant, condition, stipulation, promise, or agreement contained herein; and all covenants, conditions, stipulations, promises, and agreements contained in this Agreement shall be for the sole and exclusive benefit of the Company and the Warrant Agent and their successors, and the registered holders of the Warrant Certificates. Section 6.19 Headings. The descriptive headings of the articles and sections of this Agreement are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof. Section 6.20 Counterparts. This Agreement may be executed in any number of counterparts, each of which so executed shall be deemed to be an original; but such counterparts shall together constitute but one and the same instrument. Section 6.21 Conflict of Interest. The Warrant Agent and any stockholder, director, officer, or employee of the Warrant Agent may buy, sell, or deal in any of the Warrant Certificates or other securities of the Company or become pecuniarily interested in any transaction in which the Company may be interested or contract with or lend money to the Company or otherwise act as fully and freely as though the Warrant Agent were not Warrant Agent under this Agreement. Nothing herein shall preclude the Warrant Agent from acting in any other capacity for the Company, including, without limitation, as trustee under any indenture or as transfer agent for any securities of the Company or for any other entity. Section 6.22 Availability of the Agreement. The Warrant Agent shall keep copies of this Agreement available for inspection by holders of Warrants during normal business hours at its Corporate Trust Department. Copies of this Agreement may be obtained upon written request addressed to: Douglas S. Niethold c/o Sands Hotel & Casino Indiana Avenue & Brighton Park Atlantic City, New Jersey 08401 (609) 441-4432 14 IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto as of the day and year first above written. ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC. BY: /s/ Douglas S. Niethold ---------------------------------------------- Name: Douglas S. Niethold Title: Vice-President, Finance, Chief Financial Officer, and Principal Accounting Officer AMERICAN STOCK TRANSFER AND TRUST COMPANY BY: _______________________________________________ Name: Title: EXHIBIT A [FORM OF WARRANT CERTIFICATE] NO. CERTIFICATE FOR _____ WARRANTS ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC. COMMON STOCK PURCHASE WARRANT CERTIFICATE THIS CERTIFIES that ____________________________________ or registered assigns is the registered holder (the "Registered Holder") of the number of Warrants set forth above, each of which represents the right to purchase .275 fully paid and nonassessable share of Common Stock, par value $.01 per share (the "Common Stock"), of Atlantic Coast Entertainment Holdings, Inc., (the "Company"), a Delaware corporation, at the initial exercise price (the "Exercise Price") of $.01, at any time after the shares of Common Stock issuable upon exercise of the Warrants evidenced hereby have been registered under the Securities Act of 1933, as amended, or such other action as may be required by Federal or state law relating to the issuance or distribution of securities shall have been taken, but not before the Vesting Date hereinafter referred to, and not after the Exercise Deadline hereinafter referred to, by surrendering this Warrant Certificate, with the form of election to purchase set forth hereon duly executed with signatures guaranteed as provided below, at the office maintained pursuant to the Warrant Agreement hereinafter referred to for that purpose by American Stock Transfer and Trust Company, or its successor as warrant agent (any such warrant agent being herein called the "Warrant Agent"), and by paying in full the Exercise Price, plus transfer taxes, if any. Payment of the Exercise Price shall be made in United States currency, by certified check or money order payable to the order of the Company. Capitalized terms used herein, but not otherwise defined shall have the meaning set forth in the Warrant Agreement, (the "Warrant Agreement") dated as of July 22, 2004 by and between the Company and the Warrant Agent. Upon certain events provided for in the Warrant Agreement, the number of shares of Common Stock issuable upon the exercise of each Warrant is required to be adjusted. Each Warrant may be exercised at any time after the earliest to occur of the following events (the first date on which any such event occurs being referred to as the "Vesting Date") : (a) the payment of the entire principal amount and accrued interest on any of the Company's outstanding 3% Notes due 2008 issued by the Company (the "New Notes"), pursuant to and in accordance with the terms thereof whether such payment is in the form of cash or by issuance of shares of Common Stock to the holder thereof in lieu of cash payment or any conversion of any of such notes into common stock pursuant to and in accordance with the terms thereof; (b) a determination by a majority of the board of directors of the Company (the "Board") (including at least one independent director) that the Warrants may be exercised; and (c) payment in full by the Parent of principal and accrued, but unpaid interest on all outstanding 11% Notes due 2005 issued by the Parent which have not been exchanged for the New Notes in the Transaction. Promptly after the Vesting Date, the Company shall send written notice to the Warrant Agent that such Vesting Date has occurred (the "Vesting Notice"). The Warrant Agent shall within ten days after receipt of the Vesting Notice cause a similar notice to be mailed to each registered holder of a Warrant Certificate. The latest time and date at which the Warrants may be exercised (the "Exercise Deadline") shall be 5:00 P.M. New York City time on the earlier of (i) the date that is the seventh anniversary of the completion of the Distribution; or (ii) the Cancellation Date (as defined below). At any time after the Vesting Date, the Company by action of the Board, may at its option, cancel all, but not less than all of the Warrants provided that the Company uses reasonable efforts to register the Warrant Shares under the Securities Act. Notice of such cancellation shall be promptly given to the Warrant Agent by the Company and such notice (the "Cancellation Notice") shall be mailed to all registered holders of Warrant Certificates, not less than 90 days prior to the date established by the Board (the "Cancellation Date"). The Cancellation Notice will specify the Cancellation Date and will also state that the right to exercise the Warrants will terminate at 5:00 p.m., New York City time on the Cancellation Date. The Company will also make a prompt public announcement by news release and by notice to any national securities exchange on which the Warrants are listed for trading. After the Exercise Deadline, all Warrants evidenced hereby shall thereafter become void. Prior to the Exercise Deadline, subject to any applicable laws, rules, or regulations restricting transferability and to any restriction on transferability that may appear on this Warrant Certificate in accordance with the terms of the Warrant Agreement, the Registered Holder shall be entitled to transfer this Warrant Certificate in whole or in part upon surrender of this Warrant Certificate at the office of the Warrant Agent maintained for that purpose with the form of assignment set forth hereon duly executed, with signatures guaranteed by a member firm of a national securities exchange, a commercial bank (not a savings bank or a savings and loan association) or a trust company located in the United States, a member of the National Association of Securities Dealers, Inc., or other eligible guarantor institution which is a participant in a signature guarantee program (as such terms are defined in Reg. 240.17Ad-15 under the Securities Exchange Act of 1934, as amended) acceptable to the Warrant Agent. Upon any such transfer, a new Warrant Certificate or Warrant Certificates representing the same aggregate number of Warrants will be issued in accordance with instructions in the form of assignment. Upon the exercise of less than all of the Warrants evidenced by this Warrant Certificate, there shall be issued to the Registered Holder a new Warrant Certificate in respect of the Warrants not exercised. Prior to the Exercise Deadline, the Registered Holder shall be entitled to exchange this Warrant Certificate, with or without other Warrant Certificates, for another Warrant Certificate or Warrant Certificates for the same aggregate number of Warrants, upon surrender of this Warrant Certificate at the office maintained for such purpose by the Warrant Agent. No fractional shares will be issued upon the exercise of Warrants. As to any final fraction of a share which the registered holder of one or more Warrant Certificates, the rights under which are exercised in the same transaction, would otherwise be entitled to purchase upon such exercise, the Company shall pay the cash value thereof determined as provided in the Warrant Agreement. This Warrant Certificate is issued under and in accordance with the Warrant Agreement and is subject to the terms and provisions contained in said Warrant Agreement, to all of which terms and provisions the Registered Holder consents by acceptance hereof. This Warrant Certificate shall not entitle the registered holder of such Certificate to any of the rights of a stockholder of the Company, including, without limitation, the right to vote, to receive dividends and other distributions, or to attend or receive any notice of meetings of stockholders or any other proceedings of the Company. This Warrant Certificate shall not be valid for any purpose until it shall have been countersigned by the Warrant Agent. IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be duly executed under its facsimile corporate seal. ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC. BY: ________________________________________ Vice-President Seal Attest: _______________________________________ Secretary Countersigned: AMERICAN STOCK TRANSFER AND TRUST COMPANY BY: ________________________________________ Dated [FORM OF] ELECTION TO PURCHASE The undersigned hereby irrevocably elects to exercise __________ of the Warrants represented by this Warrant Certificate and to purchase the shares of Common Stock issuable upon the exercise of said Warrants, and requests that certificates for such shares be issued and delivered as follows: ISSUE TO: (NAME) (ADDRESS, INCLUDING ZIP CODE) (SOCIAL SECURITY OR OTHER TAX IDENTIFICATION NUMBER) DELIVER TO: (NAME) at (ADDRESS, INCLUDING ZIP CODE) If the number of Warrants hereby exercised is less than all the Warrants represented by this Warrant Certificate, the undersigned requests that a new Warrant Certificate representing the number of full Warrants not exercised be issued and delivered as set forth below. In full payment of the purchase price with respect to the Warrants exercised and transfer taxes, if any, the undersigned hereby tenders payment of $_________ by certified check or money order payable in United States currency to the order of the Company. Dated____________________, 20__ Name of Warrant Holder: ----------------------------------------------------- Address: ------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Signature: ----------------------------------------------------------------- [FORM OF] ASSIGNMENT FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers unto the Assignee named below all of the rights of the undersigned represented by the within Warrant Certificate, with respect to the number of Warrants set forth below: NAME OF ASSIGNEE ADDRESS NO. OF WARRANTS - ---------------- ------- ---------------- and does hereby irrevocably constitute and appoint ___________ Attorney to make such transfer on the books of Atlantic Coast Entertainment Holdings, Inc. maintained for that purpose, with full power of substitution in the premises. Dated: ___. ----------------------------------- Signature ----------------------------------- SIGNATURE(S) GUARANTEED Signature NOTICE: The signature(s) on this assignment must correspond with the name(s) as written upon the face of the Certificate, in every particular, without alteration or enlargement or any change By ________________________________________ whatever. THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION. (Banks, Stock Brokers, Savings and Loan Associations, and Credit Unions) WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM PURSUANT TO S.E.C. RULE 17Ad-15. EX-4.8 6 file006.txt REGISTRATION RIGHTS AGREEMENT REGISTRATION RIGHTS AGREEMENT by and between Atlantic Coast Entertainment Holdings, Inc. And The Other Signatories Hereto Dated as of July 22, 2004 TABLE OF CONTENTS This Table of Contents is not part of the Agreement to which it is attached but is inserted for convenience only.
Page ----- ARTICLE I SALE OF SHARES AND CLOSING............................................................................1 Section 1.1 PURCHASE AND SALE...........................................................................1 ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY.........................................................2 Section 2.1 CORPORATE EXISTENCE OF THE COMPANY..........................................................2 Section 2.2 AUTHORITY...................................................................................2 Section 2.3 CAPITAL AND DEBT STRUCTURE..................................................................2 Section 2.4 NO CONFLICTS................................................................................2 ARTICLE III REPRESENTATIONS AND WARRANTIES OF PURCHASER...........................................................3 Section 3.1 ORGANIZATION OF PURCHASER...................................................................3 Section 3.2 AUTHORITY...................................................................................3 Section 3.3 NO CONFLICTS................................................................................3 Section 3.4 CASINO AUTHORIZATION........................................................................4 ARTICLE IV COVENANTS OF THE COMPANY..............................................................................4 Section 4.1 PIGGY-BACK REGISTRATION.....................................................................4 Section 4.2 DEMAND REGISTRATION.........................................................................5 Section 4.3 REGISTRATIONS ON FORM S-3...................................................................5 Section 4.4 EFFECTIVENESS...............................................................................5 Section 4.5 INDEMNIFICATION BY THE COMPANY..............................................................6 Section 4.6 INDEMNIFICATION BY HOLDERS OF REGISTRABLE SHARES............................................8 Section 4.7 EXCHANGE ACT REGISTRATION...................................................................9 Section 4.8 DAMAGES....................................................................................10 Section 4.9 FURTHER OBLIGATIONS OF THE COMPANY.........................................................10 Section 4.10 EXPENSES..................................................................................12 Section 4.11 TRANSFERABILITY...........................................................................12 Section 4.12 MERGERS, ETC..............................................................................12 ARTICLE V DEFINITIONS..........................................................................................12 Section 5.1 DEFINITIONS................................................................................13 ARTICLE VI MISCELLANEOUS........................................................................................15 Section 6.1 ENTIRE AGREEMENT...........................................................................15 Section 6.2 WAIVER.....................................................................................15 Section 6.3 AMENDMENT..................................................................................15 Section 6.4 NO THIRD PARTY BENEFICIARY.................................................................15 Section 6.5 ASSIGNMENT; BINDING EFFECT.................................................................15 Section 6.6 HEADINGS...................................................................................15 Section 6.7 INVALID PROVISIONS.........................................................................16 Section 6.8 GOVERNING LAW..............................................................................16 Section 6.9 COUNTERPARTS...............................................................................16
This REGISTRATION RIGHTS AGREEMENT (the "Agreement") dated as of _______, 2004 is made and entered into by and between Atlantic Coast Entertainment Holdings, Inc., a Delaware corporation (the "Company"), and the other signatories listed hereto (collectively the "Holders"). Capitalized terms used herein, but not otherwise defined shall have the meaning set forth in the Registration Statement filed on Form S-4, dated as of _______, 2004, with Registration No. 333-110484 and the Registration Statement on Form S-4, dated as of _______, 2004, with the Registration number 333-110485, as amended. WHEREAS, pursuant to the Transaction, the Company shall distribute (the "Distribution"), pro rata to the stockholders of GB Holdings, Inc. ("Parent") (i) warrants (the "Warrants") to purchase an aggregate of 2,750,000 shares (the "Warrant Shares") of common stock, par value $.01 per share (the "Common Stock"), of the Company; or (ii) 2,750,000 shares (the "Shares") of Common Stock; WHEREAS, pursuant to the Transaction, the Company shall distribute New Notes to holders of Existing Notes that elect to tender such Notes for exchange and following the election of the holders of a majority of principal amount of the New Notes outstanding, the New Notes will be payable in or convertible into up to 7,250,000 shares of Common Stock; WHEREAS, the Holders are stockholders of Parent and will receive Warrants or Common Stock as part of the Distribution; WHEREAS, the Holders own Existing Notes and if they tender for exchange they will receive New Notes which will be payable in or convertible into up to 4,250,000 shares (the "Note Conversion Shares") of Common Stock; WHEREAS, the Holders desire, and the Company agrees to grant to the Holders, certain registration rights with respect to the Warrants, the Warrant Shares, the Shares, and the Note Conversion Shares that they receive in the Transaction. NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I DISTRIBUTION OF SHARES AND WARRANTS Section 1.1 RIGHTS GRANTED. The Company agrees that, upon consummation of the Transaction, the Holders shall be entitled to the registration rights described in Article IV herein. ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company hereby represents and warrants to The Holders as follows: Section 2.1 CORPORATE EXISTENCE OF THE COMPANY. The Company is a corporation duly incorporated, validly existing and in good standing under the Laws of the State of Delaware. The Company has full corporate power and authority to execute and deliver this Agreement and to perform the Company's obligations hereunder and to consummate the transactions contemplated hereby. Section 2.2 AUTHORITY. The execution and delivery by the Company of this Agreement, and the performance by such party of its obligations hereunder, have been duly and validly authorized by the Board of Directors of the Company, no other corporate action on the part of the Company or its stockholders being necessary. This Agreement has been duly and validly executed and delivered by the Company and constitutes a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms. Section 2.3 CAPITAL STRUCTURE. The Shares, upon issuance as contemplated herein, the Warrant Shares, when issued upon exercise of the Warrants in accordance with their terms, and the Note Conversion Shares, when issued upon payment or conversion of the New Notes, will be duly authorized, validly issued, fully paid and nonassessable. Section 2.4 NO CONFLICTS. The execution and delivery by the Company of this Agreement do not, and the performance by the Company of its obligations under this Agreement and the consummation of the transactions contemplated hereby will not: (a) conflict with or result in a violation or breach of any of the terms, conditions or provisions of the certificate of incorporation or by-laws (or other comparable corporate charter documents) of the Company; (b) conflict with or result in a violation or breach of any term or provision of any Law or Order applicable to the Company or any of its Assets and Properties (other than such conflicts, violations or breaches (i) which will not in the aggregate adversely affect the validity or enforceability of this Agreement or have a material adverse effect on the Business or Condition of the Company or (ii) as would occur solely as a result of the identity or the legal or regulatory status of the Holders or any of its Affiliates); or (c)(i) conflict with or result in a violation or breach of, (ii) constitute (with or without notice or lapse of time or both) a default under, (iii) require the Company to obtain 2 any consent, approval or action of, make any filing with or give any notice to any Person as a result or under the terms of, (iv) result in or give to any Person any right of termination, cancellation, acceleration or modification in or with respect to, or (v) result in the creation or imposition of any Lien upon the Company or any of its Assets and Properties under, any Contract or License to which the Company is a party or by which any of its Assets and Properties is bound. ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE HOLDERS Each of the Holders severally represents and warrants to the Company as follows: Section 3.1 ORGANIZATION OF THE HOLDERS. Such Holder is duly organized, validly existing and in good standing under the Laws of the state of its organization. Such Holder is duly authorized to execute and deliver this Agreement and to perform such Holder's obligations hereunder and to consummate the transactions contemplated hereby. Section 3.2 AUTHORITY. The execution and delivery by such Holder of this Agreement, and the performance by such Holder of its obligations hereunder, have been duly and validly authorized, no other action on the part of such Holder being necessary. This Agreement has been duly and validly executed and delivered by such Holder and constitutes a legal, valid and binding obligation of the Holder enforceable against the Holder in accordance with its terms. Section 3.3 NO CONFLICTS. The execution and delivery by such Holder of this Agreement does not, the performance by such Holder of its obligations under this Agreement and the consummation of the transactions contemplated hereby will not: (a) conflict with or result in a violation or breach of any of the terms, conditions or provisions of its operating agreement (or other comparable organizational documents) of such Holder; (b) conflict with or result in a violation or breach of any term or provision of any Law or Order applicable to such Holder or any of its Assets and Properties (other than such conflicts, violations or breaches (i) which will not in the aggregate adversely affect the validity or enforceability of this Agreement or have a material adverse effect on the Business or Condition of such Holder or (ii) as would occur solely as a result of the identity or the legal or regulatory status of the Company or any of its Affiliates); or (c) (i) conflict with or result in a violation or breach of, (ii) constitute (with or without notice or lapse of time or both) a default under, (iii) require such Holder to obtain any consent, approval or action of, make any filing with or give any notice to any Person as a result or under the terms of, (iv) result in or give to any Person any right of termination, cancellation, acceleration or modification in or with respect to, or (v) result in the creation or imposition of 3 any Lien upon such Holder or any of its Assets and Properties under, any Contract or License to which such Holder is a party or by which any of its Assets and Properties is bound. Section 3.4 CASINO AUTHORIZATION. To the extent required, each of the Holders has obtained Plenary Qualification from the New Jersey Casino Control Commission. ARTICLE IV COVENANTS OF THE COMPANY The Company covenants and agrees with the Holders that the Company will comply with the covenants and provisions of this ARTICLE IV, except to the extent the Holders may otherwise consent in writing: Section 4.1 PIGGY-BACK REGISTRATION. If at any time the Company shall determine to register for its own account or the account of others under the Securities Act (including pursuant to a demand for registration made by any stockholder of the Company) any of its equity securities, or warrants to purchase equity securities, other than on Form S-4 or Form S-8 or their then equivalents relating to shares of Common Stock to be issued solely in connection with any acquisition of any entity or business or shares of Common Stock issuable in connection with stock option or other employee benefit plans, it shall send to each holder of Registrable Securities as reflected on the books and records of or maintained on behalf of the Company (each a "holder"), including each holder who has the right to acquire, who is entitled to registration rights under this SECTION 4.1 written notice of such determination and, if within fifteen (15) days after receipt of such notice, such holder shall so request in writing, the Company shall use its reasonable efforts to include in such registration statement all or any part of the Registrable Securities such holder requests to be registered, except that if, in connection with any underwritten public offering of the Company the managing underwriter shall impose a limitation on the number of shares of such Common Stock which may be included in the registration statement because, in its judgment, such limitation is necessary to effect an orderly public distribution, then the Company shall be obligated to include in such registration statement only such limited portion of the Registrable Securities with respect to which such holder has requested inclusion hereunder. Any exclusion of Registrable Securities shall be made pro rata among the holders seeking to include Registrable Securities, in proportion to the number of Registrable Securities sought to be included by such holders; provided, however, that the Company shall not exclude any Registrable Securities unless the Company has first excluded all outstanding securities which are not entitled by right to inclusion of securities in such registration statement pursuant to this ARTICLE IV. No incidental right under this SECTION 4.1 shall be construed to limit any registration required under SECTION 4.2. The obligations of the Company to a holder under this SECTION 4.1 may be waived only by such Holder. Anything herein to the contrary notwithstanding, no other registration rights (demand or piggy-back) with respect to any debt or equity securities shall be granted to any Person without the consent of the Holders. 4 Section 4.2 DEMAND REGISTRATION. If at any time and from time to time after the date hereof holders of a majority of Registrable Securities shall notify the Company in writing that it or they intend to offer or cause to be offered for public sale Registrable Securities held by such holders, which shares constitute at least twenty percent (20%) of the Registrable Securities of any class, type or series, then the Company will so notify all holders of Registrable Securities, including all holders who have a right to acquire Registrable Securities. Upon written request of any holder given within fifteen (15) days after the receipt by such holder from the Company of such notification, the Company will use its best efforts to cause such of the Registrable Securities as may be requested by any holder thereof (including the holder or holders giving the initial notice of intent to offer) to be registered under the Securities Act as expeditiously as possible. In connection with any request by any holder of Registrable Securities for registration thereof pursuant to this SECTION 4.2, the Company shall have the right (to be exercised not more than one time in any 365 day period) to defer the filing of a registration statement with the Commission for up to 30 days after such filing would otherwise be required hereunder if the Company shall furnish to the holders requesting such registration a certificate approved by the Board of Directors stating that, in the good faith judgment of the Company, it would be materially detrimental to the interests of the Company for such registration statement to be filed at such time. Section 4.3 REGISTRATIONS ON FORM S-3. In addition to the rights provided the holders of Registrable Securities in SECTIONS 4.1 and 4.2, if the registration of Registrable Securities under the Securities Act can be effected on Form S-3 (or any similar form promulgated by the Commission), then upon the written request of one or more holders of Registrable Securities for the registration of Registrable Securities held by such holders, the Company will so notify each holder of Registrable Securities, including each holder who has a right to acquire Registrable Securities, and then will, as expeditiously as possible, use its best efforts to effect qualification and registration under the Securities Act on Form S-3 of all or such portion of the Registrable Securities as the holder or holders shall specify in the initial request to the Company or upon written request of a holder to the Company given within fifteen (15) days after the receipt by the holder from the Company of such notification. Section 4.4 EFFECTIVENESS. The Company will use its best efforts to maintain the effectiveness for up to 90 days (or such shorter period of time as the underwriters need to complete the distribution of the registered offering, or one year in the case of a "shelf" registration statement on Form S-3) of any registration statement pursuant to which any of the Registrable Securities are being offered, and from time to time will use reasonable efforts to amend or supplement such registration statement and the prospectus contained therein to the extent necessary to comply with the Securities Act and any applicable state securities statute or regulation. The Company will also provide each holder of Registrable Securities with as many copies of the prospectus contained in any such registration statement as it may reasonably request. 5 Section 4.5 INDEMNIFICATION BY THE COMPANY. (a) In the event that the Company registers any of the Registrable Securities under the Securities Act, the Company will indemnify and hold harmless each holder and each underwriter of the Registrable Securities (including their officers, directors, affiliates and partners) so registered (including any broker or dealer through whom such shares may be sold) and each Person, if any, who controls such holder or any such underwriter within the meaning of Section 15 of the Securities Act from and against any and all losses, claims, damages, expenses or liabilities, joint or several, to which they or any of them become subject under the Securities Act, applicable state securities laws or under any other statute or at common law or otherwise, as incurred, and, except as hereinafter provided, will reimburse each such holder, each such underwriter and each such controlling Person, if any, for any legal or other expenses reasonably incurred by them or any of them in connection with investigating or defending any actions whether or not resulting in any liability, as incurred, insofar as such losses, claims, damages, expenses, liabilities or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the registration statement, in any preliminary or amended preliminary prospectus or in the final prospectus (or the registration statement or prospectus as from time to time amended or supplemented by the Company) or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein not misleading, or any violation by the Company of any rule or regulation promulgated under the Securities Act or any state securities laws applicable to the Company and relating to action or inaction required of the Company in connection with such registration, unless (i) such untrue statement or alleged untrue statement or omission or alleged omission was made in such registration statement, preliminary or amended preliminary prospectus or final prospectus in reliance upon and in conformity with information furnished in writing to the Company in connection therewith by any such holder of Registrable Securities (in the case of indemnification of such holder), any such underwriter (in the case of indemnification of such underwriter) or any such controlling Person (in the case of indemnification of such controlling Person) expressly for use therein, or unless (ii) in the case of a sale directly by such holder of Registrable Securities (including a sale of such Registrable Securities through any underwriter retained by such holder of Registrable Securities to engage in a distribution solely on behalf of such holder of Registrable Securities), such untrue statement or alleged untrue statement or omission or alleged omission was contained in a preliminary prospectus and corrected in a final or amended prospectus copies of which were delivered to such holder of Registrable Securities or such underwriter on a timely basis, and such holder of Registrable Securities failed to deliver a copy of the final or amended prospectus at or prior to the confirmation for the sale of the Registerable Shares to the person asserting any such loss, claim, damage or liability in any case where such delivery is required by the Securities Act. (b) Promptly after receipt by any holder of Registrable Securities, any underwriter or any controlling Person, of notice of the commencement of any action in respect of which indemnity may be sought against the Company, such holder of Registrable Securities, or such underwriter or such controlling person, as the case may be, will notify the Company in writing of the commencement thereof (provided, that failure by any such person to so notify the 6 Company shall not relieve the Company from any liability it may have hereunder to any other Person entitled to claim indemnity or contribution hereunder) and, subject to the provisions hereinafter stated, the Company shall be entitled to assume the defense of such action (including the employment of counsel, who shall be counsel reasonably satisfactory to such holder of Registrable Securities, such underwriter or such controlling Person, as the case may be), and the payment of expenses insofar as such action shall relate to any alleged liability in respect of which indemnity may be sought against the Company. (c) Such holder of Registrable Securities, any such underwriter or any such controlling Person shall have the right to employ separate counsel in any such action and to participate in the defense thereof but the fees and expenses of such counsel subsequent to any assumption of the defense by the Company shall not be at the expense of the Company unless the employment of such counsel has been specifically authorized in writing by the Company. The Company shall not be liable to indemnify any Person for any settlement of any such loss, claim, damage, expense, liability or action effected without the Company's written consent. The Company shall not, except with the approval of each party being indemnified under this SECTION 4.5, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to the parties being so indemnified of a release from all liability in respect to such claim or litigation. (d) In order to provide for just and equitable contribution to joint liability under the Securities Act in any case in which any holder of Registrable Securities exercising rights under this ARTICLE IV, or any controlling Person of any such holder, makes a claim for indemnification pursuant to this SECTION 4.5 but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case notwithstanding the fact that this SECTION 4.5 provides for indemnification in such case, then, the Company and such holder will contribute to the aggregate losses, claims, damages or liabilities to which they may be subject (after contribution from others) in such proportion as is appropriate to reflect the relative fault of the Company on the one hand and of the holder of Registrable Securities on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative fault of the Company on the one hand and of the holder of Registrable Securities on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company on the one hand or by the holder of Registrable Securities on the other, and each party's relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission; provided, however, that, in any such case, (A) no such holder will be required to contribute any amount in excess of the public offering price of all such Registrable Securities offered by it pursuant to such registration statement, net of any underwriting discounts or commissions paid by such holder; and (B) no person or entity guilty of fraudulent misrepresentation (within the meaning of Section 7 11(f) of the Securities Act) will be entitled to contribution from any person or entity who was not guilty of such fraudulent misrepresentation. Section 4.6 INDEMNIFICATION BY HOLDERS OF REGISTRABLE SECURITIES. (a) In the event that the Company registers any of the Registrable Securities under the Securities Act, each holder of the Registrable Securities so registered will indemnify and hold harmless the Company, each of its directors, each of its officers who have signed or otherwise participated in the preparation of the registration statement, each underwriter of the Registrable Securities so registered (including any broker or dealer through whom such of the shares may be sold) and each Person, if any, who controls the Company within the meaning of Section 15 of the Securities Act from and against any and all losses, claims, damages, expenses or liabilities, joint or several, to which they or any of them may become subject under the Securities Act, applicable state securities laws or under any other statute or at common law or otherwise, and, except as hereinafter provided, will reimburse the Company and each such director, officer, underwriter or controlling Person for any legal or other expenses reasonably incurred by them or any of them in connection with investigating or defending any actions whether or not resulting in any liability, insofar as such losses, claims, damages, expenses, liabilities or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the registration statement, in any preliminary or amended preliminary prospectus or in the final prospectus (or in the registration statement or prospectus as from time to time amended or supplemented) or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein not misleading, but only insofar as (i) any such statement or omission was made in reliance upon and in conformity with information furnished in writing to the Company in connection therewith by such holder of Registrable Securities expressly for use therein and (ii) in the case of a sale directly by such holder of Registrable Securities (including a sale of such Registrable Securities through any underwriter retained by such holder of Registrable Securities to engage in a distribution solely on behalf of such holder of Registrable Securities), such untrue statement or alleged untrue statement or omission or alleged omission was contained in a preliminary prospectus and corrected in a final or amended prospectus copies of which were delivered to such holder of Registrable Securities or such underwriter on a timely basis, and such holder of Registrable Securities failed to deliver a copy of the final or amended prospectus at or prior to the confirmation for the sale of the Registerable Shares to the person asserting any such loss, claim, damage or liability in any case where such delivery is required by the Securities Act; provided, however, that such holder's obligations hereunder shall be limited to an amount equal to the aggregate public offering price of the Registrable Securities sold by such holder in such registration, net of any underwriting discounts or commissions paid by such holder. (b) Promptly after receipt of notice of the commencement of any action in respect of which indemnity may be sought against such holder of Registrable Securities hereunder, the Company will notify such holder of Registrable Securities in writing of the commencement thereof (provided, that failure by the Company to so notify such holder shall not 8 relieve such holder from any liability it may have hereunder to any other Person entitled to claim indemnity or contribution hereunder), and such holder of Registrable Securities shall, subject to the provisions hereinafter stated, be entitled to assume the defense of such action (including the employment of counsel, who shall be counsel reasonably satisfactory to the Company) and the payment of expenses insofar as such action shall relate to the alleged liability in respect of which indemnity may be sought against such holder of Registrable Securities. The Company and each such director, officer, underwriter or controlling Person shall have the right to employ separate counsel in any such action and to participate in the defense thereof, but the fees and expenses of such counsel subsequent to any assumption of the defense by such holder of Registrable Securities shall not be at the expense of such holder of Registrable Securities unless employment of such counsel has been specifically authorized in writing by such holder of Registrable Securities. Such holder of Registrable Securities shall not be liable to indemnify any Person for any settlement of any such loss, claim, damage, expense, or liability or action effected without such holder's written consent. (c) In order to provide for just and equitable contribution to joint liability under the Securities Act in any case in which the Company or another Person entitled to indemnification pursuant to this SECTION 4.6 makes a claim for indemnification pursuant to this SECTION 4.6, but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case notwithstanding that this SECTION 4.6 provides for indemnification, in such case, then, the Company and such holder will contribute to the aggregate losses, claims, damages or liabilities to which they may be subject (after contribution from others) in such proportion as is appropriate to reflect the relative fault of the Company on the one hand and of the holder of Registrable Securities on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative fault of the Company on the one hand and of the holder of Registrable Securities on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company on the one hand or by the holder of Registrable Securities on the other, and each party's relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission; provided, however, that, in any such case, (A) no such holder will be required to contribute any amount in excess of the public offering price of all such Registrable Securities offered by it pursuant to such registration statement, net of any underwriting discounts or commissions paid by such holder; and (B) no person or entity guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any person or entity who was not guilty of such fraudulent misrepresentation. Section 4.7 EXCHANGE ACT REGISTRATION. If the Company at any time shall list any class of equity securities on any national securities exchange or obtain authorization for shares of such class to be quoted on an automated quotation system and shall register such 9 class of equity securities under the Exchange Act, the Company will, at its expense, simultaneously list on such exchange or qualify for trading on such automated quotation system and maintain such listing or authorization of, the Registrable Securities of such class. If the Company becomes subject to the reporting requirements of either Section 13 or Section 15(d) of the Exchange Act, the Company will use its best efforts to timely file with the Commission such information as the Commission may require under either of said Sections; and in such event, the Company shall use its best efforts to take all action as may be required as a condition to the availability of Rule 144 or Rule 144A under the Securities Act (or any successor exemptive rule hereafter in effect) with respect to such equity securities. The Company shall furnish to any holder of Registrable Securities forthwith upon request (i) a written statement by the Company as to its compliance with the reporting requirements of Rule 144, (ii) a copy of the most recent annual or quarterly report of the Company as filed with the Commission, and (iii) such other reports and documents as a holder may reasonably request in availing itself of any rule or regulation of the Commission allowing a holder to sell any such Registrable Securities without registration. After the occurrence of the initial public offering, the Company agrees to use its best efforts to facilitate and expedite transfers of the Shares pursuant to Rule 144 under the Securities Act, which efforts shall include timely notice to its transfer agent to expedite such transfers of Shares. Section 4.8 DAMAGES. The Company recognizes and agrees that the holder of Registrable Securities will not have an adequate remedy if the Company fails to comply with this ARTICLE IV and that damages may not be readily ascertainable, and the Company expressly agrees that, in the event of such failure, it shall not oppose an application by the holder of Registrable Securities or any other Person entitled to the benefits of this ARTICLE IV requiring specific performance of any and all provisions hereof or enjoining the Company from continuing to commit any such breach of this ARTICLE. Section 4.9 FURTHER OBLIGATIONS OF THE COMPANY. Whenever under the preceding SECTIONS of this ARTICLE IV, the Company is required hereunder to register Registrable Securities, it agrees that it shall also do the following: (i) Furnish to each selling holder such copies of each preliminary and final prospectus and such other documents as said holder may reasonably request to facilitate the public offering of its Registrable Securities; (ii) Use its best efforts to register or qualify the Registrable Securities covered by said registration statement under the applicable securities or "blue sky" laws of such jurisdictions as any selling holder may reasonably request; provided, however, that the Company shall not be obligated to qualify to do business in any jurisdictions where it is not then so qualified or to take any action which would subject it to the service of process in suits other than those arising out of the offer or sale of the securities covered by the registration statement in any jurisdiction where it is not then so subject; 10 (iii) Furnish to each selling holder a signed counterpart, addressed to the selling holders and any underwriter, of "comfort" letters signed by the Company's independent public accountants who have examined and reported on the Company's financial statements included in the registration statement, to the extent permitted by the standards of the American Institute of Certified Public Accountants, covering substantially the same matters with respect to the registration statement (and the prospectus included therein) and (in the case of the accountants' "comfort" letters) with respect to events subsequent to the date of the financial statements, as are customarily covered in opinions of issuer's counsel and in accountants' "comfort" letters delivered to the underwriters in underwritten public offerings of securities, to the extent that the Company is required to deliver or cause the delivery of such opinion or "comfort" letters to the underwriters in an underwritten public offering of securities; (iv) Permit each selling holder of Registrable Securities or such holder's counsel or other representatives to inspect and copy such non-confidential corporate documents and records as may reasonably be requested by them; (v) Furnish to each selling holder of Registrable Securities a copy of all documents filed with and all correspondence from or to the Commission in connection with any such offering of securities; (vi) Use its best efforts to insure the obtaining of all necessary approvals from the NASD or other applicable regulatory authority, if applicable; (vii) Use its best efforts to cause all Registrable Securities so registered pursuant hereto to be listed on any securities exchange or authorized for quotation in any automated quotation system on or in which outstanding shares of such class are listed or authorized for quotation at the time such registration is declared effective by the Commission; (viii) Designate a transfer agent and registrar for the class or classes of shares which include such Registrable Securities and obtain a CUSIP number for such class or classes of shares, in each case not later than the date such registration is declared effective by the Commission; and (ix) Otherwise use its best efforts to comply with all applicable rules and regulations of the Commission, and make available to its security holders, as soon as reasonably practicable, an earning statement covering the period of at least twelve months, but not more than eighteen months, beginning with the first month after the effective date of the registration statement covering the initial public offering, which earning statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder. Whenever under the preceding SECTIONS of this ARTICLE IV the holders of Registrable Securities are registering such securities pursuant to any registration statement, each such holder agrees to timely provide to the Company, at its request, such information and 11 materials as it may reasonably request in order to effect the registration of such Registrable Securities. Section 4.10 EXPENSES. In the case of each registration effected under this Article IV, the Company shall bear all reasonable costs and expenses of each such registration on behalf of the selling holders of Registrable Securities, including, but not limited to, the Company's printing, legal and accounting fees and expenses, Commission and NASD filing fees and "Blue Sky" fees; provided, however, that the Company shall have no obligation to pay or otherwise bear any portion of the underwriters' commissions or discounts attributable to the Registrable Securities being offered and sold by the holders of the Registrable Securities, or the fees and expenses of counsel for the selling holders of Registrable Securities in connection with the registration of the Registrable Securities. The Company shall also pay all expenses of the holders of the Registrable Securities in connection with any registration initiated pursuant to this ARTICLE IV which is withdrawn or abandoned at the request of the Company. Section 4.11 TRANSFERABILITY. (a) For all purposes of ARTICLE IV of this Agreement, a Holder or assignee thereof who becomes a party to this Agreement in accordance with SECTION 4.11(b) hereof shall be deemed at any particular time to be the holder of all Registrable Securities of which such Person shall at such time be the "beneficial owner," determined in accordance with Rule 13d-3 under the Exchange Act. (b) For all purposes of ARTICLE IV of this Agreement, the holder of Registrable Securities shall include not only the Holder, but also any assignee or transferee of the Registrable Securities; provided, however, that such assignee or transferee agrees in writing to be bound by all of the provisions of this Agreement. Section 4.12 MERGERS, ETC. The Company shall not, directly or indirectly, enter into any merger, consolidation or reorganization in which the Company shall not be the surviving corporation unless the proposed surviving corporation shall, prior to such merger, consolidation or reorganization, agree in writing to assume the obligations of the Company under this Agreement, and for that purpose references hereunder to Registrable Securities shall be deemed to be references to the securities which the Holders would be entitled to receive in exchange for Registrable Securities under any such merger, consolidation or reorganization; provided, however, that the provisions of this SECTION 4.12 shall not apply in the event of any merger, consolidation, or reorganization in which the Company is not the surviving corporation if all stockholders are entitled to receive in exchange for their Registrable Securities consideration consisting solely of (i) cash, or (ii) securities of the acquiring corporation which may be immediately sold to the public without registration under the Securities Act. ARTICLE V DEFINITIONS 12 Section 5.1 DEFINITIONS. As used in this Agreement, the following defined terms have the meanings indicated below: "ACTIONS OR PROCEEDINGS" means any action, suit, proceeding, arbitration or Governmental or Regulatory Authority investigation. "AFFILIATE" means any Person that directly, or indirectly through one of more intermediaries, controls or is controlled by or is under common control with the Person specified. For purposes of this definition, control of a Person means the power, direct or indirect, to direct or cause the direction of the management and policies of such Person whether by Contract or otherwise. "ASSETS AND PROPERTIES" of any Person means all assets and properties of every kind, nature, character and description (whether real, personal or mixed, whether tangible or intangible, and wherever situated), including the goodwill related thereto, operated, owned or leased by such Person. "BOARD OF DIRECTORS" or "Board" means the board of directors of the Company as constituted from time to time. "BUSINESS OR CONDITION OF THE COMPANY" means the business, financial condition or results of operations of the Company and the Subsidiaries taken as a whole. "CODE" means the Internal Revenue Code of 1986, as amended. "COMMISSION" shall mean the United States Securities and Exchange Commission or any other federal agency at the time administering the Securities Act or the Exchange Act. "COMPANY" has the meaning ascribed to it in the forepart of this Agreement. "CONTRACT" means any agreement, lease, license, evidence of indebtedness, mortgage, indenture, security agreement or other contract. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, or any similar federal statute, and the rules and regulations of the Commission (or of any other Federal agency then administering the Exchange Act) thereunder, all as the same shall be in effect at the time. "GOVERNMENTAL OR REGULATORY AUTHORITY" means any court, tribunal, arbitrator, authority, agency, commission, official or other instrumentality of the United States or any state, county, city or other political subdivision. 13 "HOLDERS" has the meaning ascribed to it in the forepart of this Agreement. "LAWS" means all laws, statutes, rules, regulations, ordinances and other pronouncements having the effect of law of the United States or any state, county, city or other political subdivision or of any Governmental or Regulatory Authority. "LICENSE" means all licenses, permits, certificates of authority, authorizations, approvals, registrations, franchises and similar consents granted or issued by any Governmental or Regulatory Authority. "LIENS" means any mortgage, pledge, assessment, security interest, lease, lien, adverse claim, levy, charge or other encumbrance of any kind, or any conditional sale Contract, title retention Contract or other Contract to give any of the foregoing. "NASD" means the National Association of Securities Dealers, Inc. "NOTE CONVERSION SHARES" shall have the meaning ascribed in the Recitals of this Agreement. "ORDER" means any writ, judgment, decree, injunction or similar order of any Governmental or Regulatory Authority (in each such case whether preliminary or final). "PERSON" means any natural person, corporation, limited liability company, general partnership, limited partnership, proprietorship, other business organization, trust, union, association or Governmental or Regulatory Authority. "REGISTRABLE SECURITIES" shall mean and include the Shares, the Warrants the Warrant Shares, and the Note Conversion Shares issued, in the aggregate, to the Holders; provided, however, that shares of Common Stock or other securities which are Registrable Securities shall cease to be Registrable Securities upon the consummation of any sale pursuant to a registration statement or Rule 144 under the Securities Act. "SECURITIES ACT" means the Securities Act of 1933, as amended, or any similar federal statute, and the rules and regulations of the Commission (or of any other federal agency then administering the Securities Act) thereunder, all as the same shall be in effect at the time. "SEC" means Commission. "SHARES" has the meaning ascribed to it in the Recitals of this Agreement. 14 "SUBSIDIARY" means any Person in which the Company, directly or indirectly through Subsidiaries or otherwise, beneficially owns more than 50% of either the equity interests in, or the voting control of, such Person. "WARRANTS" has the meaning ascribed to it in the Recitals of this Agreement. "WARRANT SHARES" has the meaning ascribed to it in the Recitals of this Agreement. ARTICLE VI MISCELLANEOUS Section 6.1 ENTIRE AGREEMENT. This Agreement supersedes all prior discussions and agreements between the parties with respect to the subject matter hereof and contains the sole and entire agreement between the parties hereto with respect to the subject matter hereof. Section 6.2 WAIVER. Any term or condition of this Agreement may be waived at any time by the party that is entitled to the benefit thereof, but no such waiver shall be effective unless set forth in a written instrument duly executed by or on behalf of the party waiving such term or condition. No waiver by any party of any term or condition of this Agreement, in any one or more instances, shall be deemed to be or construed as a waiver of the same or any other term or condition of this Agreement on any future occasion. All remedies, either under this Agreement or by Law or otherwise afforded, will be cumulative and not alternative. Section 6.3 AMENDMENT. This Agreement may be amended, supplemented or modified only by a written instrument duly executed by or on behalf of each party hereto. Section 6.4 NO THIRD PARTY BENEFICIARY. The terms and provisions of this Agreement are intended solely for the benefit of each party hereto and their respective successors or permitted assigns, and it is not the intention of the parties to confer third-party beneficiary rights upon any other Person. Section 6.5 ASSIGNMENT; BINDING EFFECT. This Agreement and any right, interest or obligation hereunder may be assigned by Holder without the prior written consent of the Company. This Agreement is binding upon, inures to the benefit of and is enforceable by the parties hereto and their respective successors and assigns. Section 6.6 HEADINGS. The headings used in this Agreement have been inserted for convenience of reference only and do not define or limit the provisions hereof. 15 Section 6.7 INVALID PROVISIONS. If any provision of this Agreement is held to be illegal, invalid or unenforceable under any present or future Law, and if the rights or obligations of any party hereto under this Agreement will not be materially and adversely affected thereby, (a) such provision will be fully severable, (b) this Agreement will be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part hereof, and (c) the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance here from. Section 6.8 GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the Laws of the State of New York applicable to a Contract executed and performed in such State, without giving effect to the conflicts of laws principles thereof. Section 6.9 COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument. 16 IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized officer of each party hereto as of the date first above written. ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC. By: /s/ Douglas S. Niethold ---------------------------------------------- Name: Douglas S. Niethold Title: Vice-President, Finance, Chief Financial Officer, and Principal Accounting Officer CYPRUS, LLC By: BARBERRY CORP. Title: Managing Member By: /s/ Edward E. Mattner -------------------------------------------- Name: Edward E. Mattner Title: Authorized Signatory AMERICAN REAL ESTATE HOLDINGS LIMITED PARTNERSHIP By: American Property Investors, Inc., its general partner By: /s/ Keith Meister -------------------------------------------- Name: Keith Meister Title: President and CEO, API EX-10.1 7 file007.txt CONTRIBUTION AGREEMENT CONTRIBUTION AGREEMENT ---------------------- THIS CONTRIBUTION AGREEMENT (this "Agreement"), dated as of July 22, 2004, is made by and among GB Holdings, Inc., a Delaware corporation ("Parent") and Greate Bay Hotel and Casino, Inc., a New Jersey corporation ("Operating"; and together with Parent, sometimes referred to as "Transferors") and Atlantic Coast Entertainment Holdings, Inc., a Delaware corporation ("Atlantic Holdings") and ACE Gaming, LLC, a New Jersey limited liability company ("ACE Gaming"; and together with Atlantic Holdings, sometimes referred to as "Transferees"). BACKGROUND ---------- A. Operating is a wholly-owned subsidiary of Parent. Operating owns and operates the Sands Hotel and Casino in Atlantic City, New Jersey ("The Sands"). Atlantic Holdings is a newly formed, wholly-owned subsidiary of Operating. Operating owns one (1) share of the common stock of Atlantic Holdings, which (1) share represents all of the outstanding stock of Atlantic Holdings (the "Existing Atlantic Holdings Stock"). ACE Gaming is a newly formed, wholly-owned subsidiary of Atlantic Holdings. Immediately prior to the Tier 1 Contribution (as defined herein), GB Property Funding Corp., a Delaware corporation ("Funding") and a wholly-owned subsidiary of Parent, will be merged with and into Atlantic Coast Depository, LLC, a Delaware limited liability company ("AC Depository") and a wholly-owned subsidiary of Operating, with AC Depository as the surviving entity of such merger (the "Funding Merger"), such that all of the assets and liabilities of Funding shall become the assets and liabilities of AC Depository. In conjunction with the formation of AC Depository and pursuant to the terms of that certain Assignment and Assumption Agreement dated as of July 22, 2004 by and between Operating and AC Depository, AC Depository assumed the obligations of Operating under that certain Greate Bay Hotel and Casino, Inc. 11% Intercompany Note in the principal amount of $110,000,000 due 2005 made by Operating and Funding (the "Mirror Note"). B. Atlantic Holdings and ACE Gaming engaged in that certain Consent Solicitation and Offer to Exchange detailed in that certain Form S-4 Registration Statement, No. 333-110485, filed on June 1, 2004 by Atlantic Holdings and ACE Gaming with the United States Securities and Exchange Commission (the "SEC") (the "Note Registration Statement"). Pursuant to the terms of the exchange offer detailed in the Note Registration Statement (the "Exchange Offer"), Atlantic Holdings is offering the holders of those certain 11% Notes due 2005 (the "Existing Notes") issued by Funding, the opportunity to exchange such notes for (1) $100 in cash for each $1,000 principal amount of Existing Notes exchanged (the "Cash Payment"); (2) on a dollar for dollar basis, 3% Notes due 2008 (the "New Notes") issued by Atlantic Holdings; and (3) the accrued but unpaid interest on the Existing Notes. The New Notes shall be governed by the terms of that certain Indenture dated July 22, 2004, by and among Atlantic Holdings, ACE Gaming and Wells Fargo Bank, National Association, as Trustee (the "New Note Indenture"). Upon issuance of the New Notes, and otherwise in accordance with the terms of the Exchange Offer, Atlantic Holding shall cancel all Existing Notes tendered for exchange. C. Parent is also conducting a proxy solicitation under a Proxy Statement and Prospectus on Form S-4 Registration Statement, No. 333-110484, filed on June 1, 2004 by Atlantic Holdings as registrant with the SEC (the "Common Stock Registration Statement"). Pursuant to the terms of the Transaction (as defined in the Common Stock Registration Statement), prior to the consummation of the Transaction, the holders of a majority of the outstanding stock of Parent were required to and did vote in favor of the Transaction at a meeting of the stockholders of Parent on June 30, 2004. D. As a predicate to the Exchange Offer, in connection with the capitalization of Atlantic Holdings and ACE Gaming, and subject to receipt of the consent of (1) the holders of a majority of the outstanding stock of Parent, and (2) the holders of a majority of the aggregate principal amount of the Existing Notes, (a) (i) Parent desires to contribute to Operating all of Parent's assets, other than the stock of Operating, and (ii) Operating desires to contribute to Atlantic Holdings all of Operating's assets, other than the membership interests in AC Depository and the stock of Atlantic Holdings, but including the assets obtained from Parent all as more fully set forth herein (the "Tier 1 Contribution"), and (b) Atlantic Holdings desires to contribute to ACE Gaming all of the assets obtained in the Tier 1 Contribution, but specifically excluding the membership interests of ACE Gaming (the "ACE Gaming Membership Interests"), less cash in an amount of approximately $9,500,000 necessary to fund the expenses of the Transaction, all as more fully set forth herein (the "Tier 2 Contribution"; and together with the Tier 1 Contribution, the "Asset Contributions"). E. In consideration of the Tier 1 Contribution, Atlantic Holdings, among other things, shall issue to Operating certain securities of Atlantic Holdings and Atlantic Holdings shall assume all liabilities, other than the Excluded Liabilities (as defined herein), relating to the assets contributed to it by Transferors. The securities to be issued by Atlantic Holdings shall be determined by reference to the outcome of the Exchange Offer. If 100% of the Existing Notes are exchanged for New Notes, then Atlantic Holdings will issue to Operating 27.5% (on a fully diluted basis immediately after consummation of the Transactions and without giving effect to any further issuance not related to such Transaction) of the outstanding common stock, par value $0.01 per share, of Atlantic Holdings (the "Atlantic Holdings Common Stock"), less the Existing Atlantic Holdings Stock. If less than 100% of the Existing Notes are exchanged for New Notes, then Atlantic Holdings will issue to Operating (1) warrants to purchase shares of Atlantic Holdings Common Stock at a purchase price of $0.01 per share (the "Warrants") representing 27.5% (on a fully diluted basis immediately after consummation of the Transaction and without giving effect to any further issuance not related to such Transaction) of the outstanding Atlantic Holdings Common Stock, and (2) a portion of the Atlantic Holdings Common Stock equal to the product of (y) 72.5% and (z) a fraction, the numerator of which is the total principal amount of the Existing Notes that are not exchanged for New Notes and the denominator of which is the total 2 principal amount of the Existing Notes outstanding immediately prior to the completion of the Exchange Offer (being $110,000,000), less the Existing Atlantic Holdings Stock. The Atlantic Holdings Common Stock and the Warrants, if any, issued by Atlantic Holdings in connection with the Exchange Offer, as described above, are sometimes collectively referred to as the "Atlantic Holdings Securities". F. In consideration of the Tier 2 Contribution, ACE Gaming, among other things, shall assume all liabilities (other than the Tier 1 Excluded Liabilities and the Tier 2 Excluded Liabilities, as such terms are defined herein) relating to the assets contributed to it by Atlantic Holdings and ACE Gaming shall guarantee the New Notes and grant liens upon substantially all of the assets of ACE Gaming for the benefit of the holders of the New Notes, all as more fully set forth herein. G. Following the Tier 1 Contribution and the Tier 2 Contribution and after the effectiveness of the exchange transactions contemplated by the Exchange Offer and the cancellation of the Existing Notes tendered in the Transaction, Operating and AC Depository will each be merged with and into Parent, with Parent as the surviving entity, such that all of the assets and liabilities of Operating and AC Depository shall become the assets and liabilities of Parent (the merger of Operating and AC Depository into Parent, the "Operating Merger"). H. For Federal income tax purposes, it is intended that the asset contribution described in clause (ii) of the Tier 1 Contribution and the Operating Merger qualify as a "reorganization" under the provisions of Section 368(a)(i)(F) of the Internal Revenue Code of 1986, as amended (the "Code") and Parent, Operating, and Atlantic Holdings hereby adopt this Agreement as a plan of reorganization. NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and the other agreements being entered in connection with the Exchange Offer and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows: 1. Tier 1 Contribution. 1.1 Capital Contribution. Effective as of the date hereof, (i) Parent hereby contributes, transfers, assigns and conveys to Operating all right, title and interest in and to all of the assets of Parent, both tangible and intangible, of every nature and type whatsoever, other than its stock in Operating, and (ii) Operating hereby contributes, transfers, assigns and conveys to Atlantic Holdings all right, title and interest in and to all of the assets both tangible and intangible of every nature and type whatsoever of Operating (including those obtained pursuant to clause (i) of this Section 1.1) less only those "Excluded Assets" listed on Schedule 1.1 hereto (the assets so transferred being referred to collectively as the "Tier 1 Assets"). 3 1.2 Conveyance of the Tier 1 Assets. As of the date hereof, or as soon after the date hereof as practicable, Transferors shall: (i) place Atlantic Holdings in effective possession, control and operation of the Tier 1 Assets and deliver to Atlantic Holdings all Tier 1 Assets, title to which is capable of passing by delivery; and (ii) deliver to Atlantic Holdings duly executed assignments or other instruments and documentation reasonably required to transfer to Atlantic Holdings all right, title and interest in and to the Tier 1 Assets. 1.3. Consideration. In consideration of the Tier 1 Contribution, Atlantic Holdings, on behalf of itself and its subsidiaries now existing and hereafter acquired, hereby: (i) accepts all right, title and interest in and to the Tier 1 Assets and does hereby assume and agree to promptly and fully pay, perform and discharge when due all obligations and liabilities associated with the Tier 1 Assets, other than and excluding those obligations, liabilities and other matters listed or referred to on Schedule 1.3(i) hereto which are expressly not assumed (the "Tier 1 Excluded Liabilities") (the obligations and liabilities so assumed collectively referred to as the "Atlantic Holdings Assumed Liabilities"); and (ii) agrees to indemnify Transferors against all actions, proceedings, costs, liabilities, damages, claims and demands arising out of the Atlantic Holdings Assumed Liabilities or the operation of The Sands by Atlantic Holdings or its transferee subsequent to the date hereof (other than and excluding the Tier 1 Excluded Liabilities and any matters related thereto or arising therefrom) except insofar as such actions, proceedings, costs, damages, claims and demands arise out of the gross negligence or willful misconduct of Transferors or a breach of any of the representations and warranties of Transferors contained in Section 1.4; and (iii) agrees to issue to Operating or its designee the Atlantic Holdings Securities in such form and amounts as is required under the terms of the Exchange Offer; (iv) agrees to (a) acquire those Existing Notes which are tendered in connection with the Exchange Offer, (b) issue New Notes in consideration of such tender as required by the terms of the Exchange Offer, and (c) cancel those Existing Notes which are tendered in connection with the Exchange Offer; and (v) undertakes to provide to Parent the Permitted Payment (as that term is defined in the New Note Indenture). 4 1.4. Transferors' Representations and Warranties. Transferors hereby represent and warrant to Atlantic Holdings that, as of the date hereof: 1.4.1 Organization and Existence. Parent is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. Operating is a corporation duly organized, validly existing and in good standing under the laws of the State of New Jersey. Transferors have all requisite corporate power and authority to own and operate their properties, to carry on their business as now conducted and as proposed to be conducted, to enter into the Exchange Offer and to carry out the transactions contemplated by the Registration Statement. AC Depository is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware. AC Depository has all requisite limited liability company power and authority to own and operate its properties, to carry on its business as now conducted and as proposed to be conducted, to carry out the transactions contemplated hereby. 1.4.2 Due Authorization. The execution, delivery and performance of all documents contemplated by the Registration Statement have been duly authorized by all necessary corporate action on the part of Transferors. 1.4.3 Due Execution and Delivery; Enforceability. This Agreement has been duly executed and delivered by Transferors in accordance with its terms and represents the legal, valid and binding agreement of Transferors enforceable against Transferors in accordance with its terms. 1.4.4 No Conflicts. Except as set forth on Schedule 1.4.4, the execution, delivery and performance of this Agreement by Transferors, and the consummation of the transactions contemplated hereby, do not and will not conflict with or result in a breach or violation of (i) any of the terms or provisions of, or constitute a default or cause an acceleration or any obligation under, or result in the imposition or creation of (or the obligation to create or impose), any security interest, mortgage, pledge, claim, lien, encumbrance or adverse interest of any nature (each, a "Lien") with respect to any obligation, bond agreement, note, debenture or other evidence of indebtedness or any indenture, mortgage, deed of trust or other agreement, lease or instrument to which Transferors or any of their affiliates is a party or by which Transferors or any of their affiliates is bound or to which any of the properties or assets of Transferors or any of their affiliates (including, without limitation, the Tier 1 Assets) may be subject or (ii) any Federal, state or local law, rule, administrative regulation or ordinance or order of any court or governmental agency, body or official having jurisdiction over Transferors or any of the Tier 1 Assets, except, in the case of clause (i), for immaterial breaches of contracts. 1.4.5 No Consents or Approvals. Except as set forth on Schedule 1.4.5, no authorization, approval, consent or order of, or filing with, (i) any court or governmental body, agency or official, including the New Jersey Casino Control 5 Commission, the New Jersey Division of Gaming Enforcement and the New Jersey Department of Environmental Protection, or (ii) any other third party is necessary in connection with any material element of the transactions contemplated by this Agreement, except those that have been obtained or made, and are in full force and effect or which are immaterial in nature. 1.4.6 Title to Tier 1 Assets. Except as set forth on Schedule 1.4.6, Transferors have good title to the Tier 1 Assets, free and clear of any Liens. 2. Tier 2 Contribution. 2.1 Capital Contribution. Immediately following the Tier 1 Contribution and the issuance of the Atlantic Holdings Securities, Atlantic Holdings hereby contributes, transfers, assigns and conveys to ACE Gaming all right, title and interest in and to all of the Tier 1 Assets, less only (a) cash in an amount necessary to fund the Cash Payment and the accrued and unpaid interest paid on those Existing Notes being exchanged in the Exchange Offer, (b) cash in the amount of approximately $9,500,000 necessary to fund the related expenses incurred in completing the Transaction and (c) those "Excluded Assets" listed on Schedule 2.1 hereto (the assets so transferred being referred to collectively as the "Tier 2 Assets" and collectively with the Tier 1 Assets, the "Assets"). 2.2 Conveyance of the Tier 2 Assets. As of the date hereof, or as soon after the date hereof as practicable, Atlantic Holdings shall: (i) place ACE Gaming in effective possession, control and operation of the Tier 2 Assets and deliver to ACE Gaming all Tier 2 Assets, title to which is capable of passing by delivery; and (ii) deliver to ACE Gaming duly executed assignments or other instruments and documentation reasonably required to transfer to ACE Gaming all right, title and interest in and to the Tier 2 Assets. 2.3. Consideration. In consideration of the Tier 2 Contribution, ACE Gaming, on behalf of itself and its subsidiaries now existing and hereafter acquired, hereby: (i) accepts all right, title and interest in and to the Tier 2 Assets and does hereby assume and agree to promptly and fully pay, perform and discharge when due all obligations and liabilities of Atlantic Holdings, other than and exclusive of the obligations, liabilities and other matters listed on or referred to on Schedule 2.3(i) hereto which are expressly not assumed (the "Tier 2 Excluded Liabilities") (the obligations and liabilities so assumed collectively referred to as the "ACE Gaming Assumed Liabilities"); and 6 (ii) agrees to indemnify Atlantic Holdings against all actions, proceedings, costs, liabilities, damages, claims and demands arising in connection with the ACE Gaming Assumed Liabilities or the operation of The Sands by ACE Gaming or its transferee subsequent to the date hereof (other than and excluding the Tier 2 Excluded Liabilities and any matters arising therefrom or relating thereto) except insofar as such actions, proceedings, costs, damages, claims and demands arise out of the gross negligence or willful misconduct of Atlantic Holdings or a breach of any of the representations and warranties of Atlantic Holdings contained in Section 2.4; and (iii) undertakes to provide to Atlantic Holdings the funds necessary to make the Permitted Payment. (iv) agrees to take such actions and execute such documents as may be necessary to effectively (a) guaranty each and every obligation of Atlantic Holdings described in the New Notes and the New Note Indenture, and (b) pledge as security for such guaranty all or substantially all of the assets of ACE GAMING. 2.4. Atlantic Holdings' Representations and Warranties. Atlantic Holdings hereby represents and warrants to ACE Gaming that, as of the date hereof: 2.4.1 Organization and Existence. Atlantic Holdings is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. Atlantic Holdings has all requisite corporate power and authority and limited liability company power and authority, respectively, to own and operate their properties, to carry on their business as now conducted and as proposed to be conducted, to enter into the Exchange Offer and to carry out the transactions contemplated by the Registration Statement. 2.4.2 Due Authorization. The execution, delivery and performance of all documents contemplated by the Registration Statement have been duly authorized by all necessary corporate action on the part of Transferors. 2.4.3 Due Execution and Delivery; Enforceability. This Agreement has been duly executed and delivered by Atlantic Holdings in accordance with its terms and represents the legal, valid and binding agreement of Atlantic Holdings enforceable against Atlantic Holdings in accordance with its terms. 2.4.4 No Conflicts. Except as set forth on Schedule 2.4.4, the execution, delivery and performance of this Agreement by Atlantic Holdings, and the consummation of the transactions contemplated hereby, do not and will not conflict with or result in a breach or violation of (i) any of the terms or provisions of, or constitute a default or cause an acceleration or any obligation under, or result in the imposition or creation of (or the obligation to create or impose), Lien with respect to any obligation, bond agreement, note, debenture or other evidence of indebtedness or any indenture, mortgage, deed of trust or other agreement, lease or instrument to which Atlantic 7 Holdings or any of its affiliates is a party or by which Atlantic Holdings or any of its affiliates is bound or to which any of the properties or Tier 2 Assets of Atlantic Holdings or any of its affiliates (including, without limitation, the Tier 2 Assets) may be subject or (ii) any Federal, state or local law, rule, administrative regulation or ordinance or order of any court or governmental agency, body or official having jurisdiction over Atlantic Holdings or any of the Tier 2 Assets, except, in the case of clause (i), for immaterial breaches of contracts. 2.4.5 No Consents or Approvals. Except as set forth on Schedule 2.4.5, no authorization, approval, consent or order of, or filing with, (i) any court or governmental body, agency or official, including the New Jersey Casino Control Commission, the New Jersey Division of Gaming Enforcement and the New Jersey Department of Environmental Protection, or (ii) any other third party is necessary in connection with any material element of the transactions contemplated by this Agreement, except those that have been obtained or made, and are in full force and effect or which are immaterial in nature. 2.4.6 Title to Tier 2 Assets. Except as set forth on Schedule 2.4.6, Atlantic Holdings has good title to the Tier 2 Assets, free and clear of any Liens. 3. Excluded Liabilities. Parent and Operating hereby expressly represent, warrant, acknowledge and agree that neither Atlantic Holdings nor ACE Gaming has assumed or shall have any responsibility for or obligations in respect of or relating to, or arising out of, the Tier 1 Excluded Liabilities. 4. Miscellaneous. 4.1 Further Assurances. The Transferors shall at any time and from time to time after the date hereof, upon the request of the Transferees, execute and deliver such further instruments of conveyance and transfer, in form and substance reasonably satisfactory to Transferee's counsel, and take such other action as Transferee may reasonably request in order to more effectively convey, transfer and vest in Transferee full and complete ownership of the Assets and to enable Transferee to collect and reduce the Assets to its possession as contemplated hereby. 4.2 Waiver; Amendment. Neither this Agreement nor any provision hereof shall be waived, amended, modified, changed, discharged or terminated except by an instrument in writing executed by Transferors and Transferees. 4.3 Entire Agreement. This Agreement, together with the schedules hereto, sets forth the entire agreement and understanding of the parties hereof with respect to the transactions contemplated hereby and supersedes any and all prior agreements and understandings relating to the subject matter thereof. No representation, promise or statement of intention has been made by any party hereto which is not embodied in this Agreement or the written schedules or other documents 8 delivered pursuant hereto or in connection with the transactions contemplated hereby, and no party hereto shall be bound by or liable for any alleged representation, promise or statement of intention not set forth herein or therein. All of the documents referred to in the immediately preceding sentence are hereby incorporated by reference and shall be deemed a part of this Agreement with the same effect as if set forth in full herein. 4.4 Severability. If any provision of this Agreement or the application of any such provision to any person or circumstance shall be held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, this Agreement shall continue in full force and effect without said provision; provided that no such severance of any provision shall be effective if it materially changes the economic benefit of this Agreement to any party. 4.5 Section and Other Headings. The section headings contained in this Agreement and the schedules thereto are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 4.6 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW JERSEY, WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS PRINCIPALS THEREOF. TRANSFERORS AND TRANSFEREES HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY NEW JERSEY STATE COURT SITTING IN ATLANTIC CITY, NEW JERSEY OR ANY FEDERAL COURT SITTING IN CAMDEN, NEW JERSEY IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND IRREVOCABLY ACCEPT FOR THEMSELVES AND IN RESPECT OF THEIR PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. TRANSFERORS AND TRANSFEREES IRREVOCABLY WAIVE, TO THE FULLEST EXTENT THEY MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY OBJECTION WHICH THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN ANY INCONVENIENT FORUM. 4.7 Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which together shall be deemed to be one and the same agreement. 4.8 Notice. Each notice, demand, request, request for approval, consent, approval, disapproval, designation or other communication (each of the foregoing being referred to herein as "notice") required or desired to be given or made under this Agreement shall be in writing (except as otherwise provided in this Agreement), and shall be effective and deemed to have been received (i) when delivered in person, (ii) when sent by facsimile transmission with receipt acknowledged, 9 (iii) three (3) days after having been mailed by certified or registered United States mail, postage prepaid, return receipt requested, or (iv) the next business day after having been sent by a nationally recognized overnight mail or courier service, receipt requested (a) if to Transferors, at c/o Sands Hotel and Casino, Indiana Avenue and Brighton Park, Atlantic City, New Jersey 08401; or (b) if to Transferees, at c/o Sands Hotel and Casino, Indiana Avenue and Brighton Park, Atlantic City, New Jersey 08401. 4.9 Compliance with State Gaming Regulations. Each of the provisions of this Agreement is subject to and shall be enforced in compliance with the provisions, regulations or approvals required by any statement gaming authority, including, without limitation, the New Jersey Casino Control Commission and the New Jersey Division of Gaming Enforcement. 4.10 Third Party Rights. Nothing in this Agreement is intended or shall be construed to confer upon or give any person, other than the parties hereto and their respective successors, any rights or remedies under or by reason of this Agreement or any transaction contemplated hereby. 4.11 Additional and/or Corrective Transfers. Transferors and Transferees acknowledge and agree that: (i) all of the Assets are intended to be contributed, sold, assigned, transferred and conveyed to the respective Transferees on the date of this Agreement, as contemplated under Sections 1 and 2 hereof; and (ii) from and after the date hereof the Transferees are and shall be the beneficial owners of the Assets, as contemplated under Sections 1 and 2 hereof. Transferors hereby appoint and designate Transferees, and each of them, as the agents and attorney(s)-in-fact for Transferors, with full power of substitution, to effect and/or confirm the transfer to Transferees, effective as of the date hereof, of any of the Assets (whether known or unknown to the parties as of the date hereof), all as contemplated under this Agreement. In such capacity, Transferees are authorized in the name, place and stead of Transferors, or any of them, to execute, acknowledge, deliver and/or submit for filing or recording such documents or instruments (including without limitation, instruments of conveyance), and to take such other actions, as they deem necessary or appropriate, in their discretion, to accomplish the aforesaid purposes and intentions of this Agreement. The foregoing power of attorney is coupled with an interest, and shall be irrevocable. Transferors intend and agree further that the foregoing power of attorney shall survive the dissolution or other termination of Transferors, without the need for any other action or documentation by any party. 10 IN WITNESS WHEREOF, the parties hereto have duly executed this Contribution Agreement as of the date first above written. ATTEST: GB HOLDINGS, INC., a Delaware corporation /s/ Patricia M. Wild By: /s/ Douglas S. Niethold - ----------------------------- ----------------------- Patricia M. Wild Douglas S. Niethold General Counsel, Vice President CFO and Vice President - Finance and Secretary ATTEST: GREATE BAY HOTEL AND CASINO, INC., a New Jersey corporation /s/ Patricia M. Wild By: /s/ Douglas S. Niethold - ----------------------------- ----------------------- Patricia M. Wild Douglas S. Niethold General Counsel, Vice President CFO and Vice President - Finance and Secretary ATTEST: ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC., a Delaware corporation /s/ Patricia M. Wild By: /s/ Douglas S. Niethold - ----------------------------- ----------------------- Patricia M. Wild Douglas S. Niethold General Counsel, Vice President CFO and Vice President - Finance and Secretary ATTEST: ACE GAMING LLC, a New Jersey limited liability company /s/ Patricia M. Wild By: /s/ Douglas S. Niethold - ----------------------------- ----------------------- Patricia M. Wild Douglas S. Niethold General Counsel, Vice President CFO and Vice President - Finance and Secretary 11 SCHEDULE 1.1 EXCLUDED ASSETS 1. Policies of Directors and Officers Insurance. 2. Membership Interests in AC Depository. 3. Common Stock of Atlantic Holdings. 12 SCHEDULE 1.3(I) --------------- TIER 1 EXCLUDED LIABILITIES 1. All obligations, duties, liabilities, indemnities, debts, guarantees, covenants, agreements and other obligations of any kind or description under, in respect of, associated with, arising under or otherwise relating to the Existing Notes and the Mirror Note, including without limitation, that certain Indenture among Funding, as Issuer, Holdings and Operating, as Guarantors and the Trustee thereunder relating to the Existing Notes; Security Agreement by Funding, Operating and Holdings in favor of Trustee; $110,000,000 principal amount 11% Intercompany Note of GBHC due September 29, 2005, together with blank Irrevocable Bond Power; Mortgage, Fixture Filing and Security Agreement by Operating in favor of Trustee; Collateral Assignment of Leases by Operating in favor of Trustee; Fractional Note Pool Trust Agreement between Funding and Trustee; and any other indenture, security agreements, guaranties or other instruments related thereto. The term "Tier 1 Excluded Liabilities" shall include all of the foregoing. 13 SCHEDULE 1.4.4 -------------- CONFLICTS None. 14 SCHEDULE 1.4.5 -------------- CONSENTS AND APPROVALS None. 15 SCHEDULE 1.4.6 -------------- TITLE EXCEPTIONS 1. All those certain encumbrances listed on Schedule B - Section II of that certain ALTA Loan Policy No. 102161060, issued by the Title Company of Jersey, as agent for Stewart Title Guaranty Company, dated June 22, 2004. 2. The terms of a lease, license or management agreement(s) with an energy management company(s), supplier(s), or intermediary(s) related thereto now or hereafter entered into concerning or with respect to the supply and/or management of utility services and/or the operation of existing or newly supplied equipment at the property, including, but not limited to heating, ventilation, and air-conditioning and energy production related equipment. 3. That certain unrecorded Lease Agreement for Lot 29 in Block 156 between Mortgagor as Landlord, and T&M Parking, Inc., as Tenant, dated March 20, 1996, having a month-to-month term. 4. That certain License Agreement by and between Mortgagor and Eva Daush, d/b/a Sansations Hair Salon, dated April 28, 1999, and amended March 15, 2000, for a term to expire September 15, 2000, and to be renewed upon substantially the same terms. 5. That certain License Agreement by and between Mortgagor and 21st Century Hot Dogs, LLC, dated May 16, 2003, for a term of three (3) years. 6. That certain Contract for the Sale/Purchase of Real Estate by and between Operating and Brookside Point, L.L.C. dated May 27, 2003, regarding Lot 63, block 326 in the Township of Little Egg Harbor, Ocean County, New Jersey. 16 SCHEDULE 2.1 ------------ EXCLUDED ASSETS 1. Membership Interests in ACE Gaming. 17 SCHEDULE 2.3(I) --------------- TIER 2 EXCLUDED LIABILITIES 1. All obligations of Atlantic Holdings under the New Notes, other than the obligations of ACE Gaming as guarantor of the obligations of Atlantic Holdings under the New Note Indenture and the New Notes pursuant to the guaranty of ACE Gaming (which shall be undertaken by ACE Gaming in connection with the issuance of the New Notes rather than assumed as ACE Gaming Assumed Liabilities under Section 2.3(i)). 18 SCHEDULE 2.4.4 -------------- CONFLICTS None. 19 SCHEDULE 2.4.5 -------------- CONSENTS AND APPROVALS None. 20 SCHEDULE 2.4.6 -------------- TITLE EXCEPTIONS 1. All those exceptions on listed on Schedule 1.4.6. 21 EX-10.2 8 file008.txt PLEDGE AND SECURITY AGREEMENT PLEDGE AND SECURITY AGREEMENT DATED AS OF JULY 22, 2004 AMONG ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC. ACE GAMING, LLC AND CERTAIN SUBSIDIARIES OF ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC., AS GRANTORS AND WELLS FARGO BANK, NATIONAL ASSOCIATION, AS TRUSTEE TABLE OF CONTENTS PAGE SECTION 1. DEFINITIONS; GRANT OF SECURITY...................................1 1.1 GENERAL DEFINITIONS..............................................1 1.2 DEFINITIONS; INTERPRETATION......................................8 SECTION 2. GRANT OF SECURITY................................................8 2.1 GRANT OF SECURITY................................................8 2.2 CERTAIN LIMITED EXCLUSIONS.......................................9 SECTION 3. SECURITY FOR OBLIGATIONS; GRANTORS REMAIN LIABLE.................9 3.1 SECURITY FOR OBLIGATIONS.........................................9 3.2 CONTINUING LIABILITY UNDER COLLATERAL............................9 3.3 RELEASE.........................................................10 3.4 SUBORDINATION...................................................10 SECTION 4. REPRESENTATIONS AND WARRANTIES AND COVENANTS....................10 4.1 GENERALLY.......................................................10 4.2 EQUIPMENT AND INVENTORY.........................................13 4.3 RECEIVABLES.....................................................14 4.4 INVESTMENT RELATED PROPERTY.....................................16 4.5 MATERIAL CONTRACTS..............................................22 4.6 LETTER OF CREDIT RIGHTS.........................................23 4.7 INTELLECTUAL PROPERTY...........................................24 4.8 COMMERCIAL TORT CLAIMS..........................................27 SECTION 5. ACCESS; RIGHT OF INSPECTION AND FURTHER ASSURANCES; ADDITIONAL GRANTORS...........................................27 5.1 ACCESS; RIGHT OF INSPECTION.....................................27 5.2 FURTHER ASSURANCES..............................................27 5.3 ADDITIONAL GRANTORS.............................................28 SECTION 6. SECURED PARTY APPOINTED ATTORNEY-IN-FACT........................28 6.1 POWER OF ATTORNEY...............................................28 6.2 NO DUTY ON THE PART OF SECURED PARTY............................29 6.3 RATIFICATION....................................................29 SECTION 7. REMEDIES........................................................29 7.1 GENERALLY.......................................................29 7.2 APPLICATION OF PROCEEDS.........................................31 7.3 SALES ON CREDIT.................................................31 7.4 DEPOSIT ACCOUNTS................................................31 7.5 INVESTMENT RELATED PROPERTY.....................................31 7.6 INTELLECTUAL PROPERTY...........................................32 7.7 COLLATERAL PROCEEDS.............................................33 7.8 TAX REFUNDS.....................................................34 SECTION 8. SECURED PARTY...................................................34 SECTION 9. CONTINUING SECURITY INTEREST; TRANSFER OF NOTES.................34 SECTION 10. STANDARD OF CARE; SECURED PARTY MAY PERFORM....................35 SECTION 11. MISCELLANEOUS..................................................35 SECTION 12. Casino Control Act.............................................36 SECTION 13. Reimbursement of Legal Fees....................................36 SCHEDULE 4.1-- GENERAL INFORMATION SCHEDULE 4.2 -- LOCATION OF EQUIPMENT AND INVENTORY SCHEDULE 4.4-- INVESTMENT RELATED PROPERTY SCHEDULE 4.5-- MATERIAL CONTRACTS SCHEDULE 4.6-- DESCRIPTION OF LETTERS OF CREDIT SCHEDULE 4.7-- INTELLECTUAL PROPERTY SCHEDULE 4.8-- COMMERCIAL TORT CLAIMS EXHIBIT A-- PLEDGE SUPPLEMENT EXHIBIT B-- FORM OF ACCOUNT CONTROL AGREEMENT EXHIBIT C-- FORM OF PERSONAL PROPERTY SECURITY INTEREST OPINION This PLEDGE AND SECURITY AGREEMENT, dated as of July 22, 2004 (this "AGREEMENT"), between ACE Gaming, LLC, a New Jersey limited liability company ("ACE"), Atlantic Coast Entertainment Holdings, Inc., a Delaware corporation (the "COMPANY"), any Additional Grantor (as herein defined) (each, a "GRANTOR"), and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, as trustee (in such capacity as trustee, the "SECURED PARTY"), for the Holders under an Indenture dated as of July 22, 2004 among the Company , as issuer, the Secured Party, as trustee, and ACE, as guarantor (such Indenture, as it may be amended, supplemented, or otherwise modified from time to time in accordance with its terms, the "INDENTURE"). RECITALS: WHEREAS, each of the Company, the Secured Party, and ACE have entered into the Indenture pursuant to which the Company will issue, and ACE will guarantee, on the date hereof up to $110,000,000 aggregate principal amount of 3% Notes Due 2008 (the "NOTES"); WHEREAS, each Grantor has agreed to secure such Grantor's obligations under the Indenture and the Notes as set forth herein, and subject to the limitations set forth herein; NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, each Grantor and the Secured Party agree as follows: SECTION 1. DEFINITIONS; GRANT OF SECURITY. 1.1 GENERAL DEFINITIONS. In this Agreement, the following terms shall have the following meanings: "ACCOUNT DEBTOR" shall mean each Person who is obligated on a Receivable or any Supporting Obligation related thereto. "ACCOUNTS" shall mean all "accounts" as defined in Article 9 of the UCC. "AGREEMENT" shall have the meaning set forth in the preamble. "ADDITIONAL GRANTORS" shall have the meaning assigned in Section 5.3. "ASSIGNED AGREEMENTS" shall mean all agreements and contracts to which such Grantor is a party as of the date hereof, or to which such Grantor becomes a party after the date hereof, including, without limitation, each Material Contract, as each such agreement may be amended, supplemented or otherwise modified from time to time. "BANKRUPTCY CODE" means title 11 of the United States Code entitled "Bankruptcy" as now and hereafter in effect, or any successor statute. "B&B LICENSE AGREEMENT" means that certain License Agreement, dated May 15, 2000, as amended, between B&B Parking, Inc., as lessor and ACE as assignee of Greate Bay Hotel and Casino, Inc. as lessee, with respect to certain property located in the City of Atlantic City, County of Atlantic and State of New Jersey. "CASINO CONTROL ACT" means the New Jersey Casino Control Act, N.J. Stat. Ann. 5:12-1 et seq. (New Jersey Public Law 1977, C.110), and the regulations promulgated thereunder, N.J.A.C. 19:40-1.1 et seq., as from time to time amended, or any successor provision of law. 1 "CHATTEL PAPER" shall mean all "chattel paper" as defined in Article 9 of the UCC, including, without limitation, "electronic chattel paper" or "tangible chattel paper", as each term is defined in Article 9 of the UCC. "COLLATERAL" shall have the meaning assigned in Section 2.1. "COLLATERAL ACCOUNT" shall mean, initially, the account numbered 7858014223 maintained by Commerce Bank in the name of "ACE Gaming, LLC", and subsequently, any account established at a financial institution designated by the Secured Party in the name of "ACE Gaming, LLC", together with any and all successor, replacement or substituted accounts thereto. "COLLATERAL RECORDS" shall mean books, records, ledger cards, files, correspondence, customer lists, blueprints, technical specifications, manuals, computer software, computer printouts, tapes, disks and related data processing software and similar items that at any time evidence or contain information relating to any of the Collateral or are otherwise necessary or helpful in the collection thereof or realization thereupon. "COLLATERAL SUPPORT" shall mean all property (real or personal) assigned, hypothecated or otherwise securing any Collateral and shall include any security agreement or other agreement granting a lien or security interest in such real or personal property. "COLLECTION ACCOUNT" shall mean any account established at a financial institution, in the name of any Grantor, to which proceeds of Receivables are generally deposited, together with any and all successor, replacement or substituted accounts thereto. "COMMERCIAL TORT CLAIMS" shall mean all "commercial tort claims" as defined in Article 9 of the UCC, including, without limitation, all commercial tort claims listed on Schedule 4.8 (as such schedule may be amended or supplemented from time to time). "COMMODITIES ACCOUNTS" (i) shall mean all "commodity accounts" as defined in Article 9 of the UCC and (ii) shall include, without limitation, all of the accounts listed on Schedule 4.4 under the heading "Commodities Accounts" (as such schedule may be amended or supplemented from time to time). "COMPANY" shall have the meaning set forth in the recitals. "CONCENTRATION ACCOUNT" shall mean all of the accounts listed on Schedule 4.4(A) under the heading "Deposit Accounts: Concentration Account" (as such schedule may be amended or supplemented from time to time), together with any and all successor, replacement or substituted accounts thereto. "CONTROLLED FOREIGN CORPORATION" shall mean "controlled foreign corporation" as defined in the Tax Code. "COPYRIGHT LICENSES" shall mean any and all agreements providing for the granting of any right in or to Copyrights (whether such Grantor is licensee or licensor thereunder) including, without limitation, each agreement referred to in Schedule 4.7(B) (as such schedule may be amended or supplemented from time to time). 2 "COPYRIGHTS" shall mean all United States, state and foreign copyrights, all mask works fixed in semi-conductor chip products (as defined under 17 U.S.C. 901 of the U.S. Copyright Act), whether registered or unregistered, now or hereafter in force throughout the world, all registrations and applications therefor including, without limitation, the applications referred to in Schedule 4.7(A) (as such schedule may be amended or supplemented from time to time), all rights corresponding thereto throughout the world, all extensions and renewals of any thereof, the right to sue for past, present and future infringements of any of the foregoing, and all proceeds of the foregoing, including, without limitation, licenses, royalties, income, payments, claims, damages, and proceeds of suit. "DEPOSIT ACCOUNTS" (i) shall mean all "deposit accounts" as defined in Article 9 of the UCC and in any event shall include any demand, time, savings, passbook or title account maintained with a depository institution and (ii) shall include, without limitation, all of the accounts listed on Schedule 4.4 under the heading "Deposit Accounts" (as such schedule may be amended or supplemented from time to time), including, without limitation, the Collateral Account, the Concentration Account, the Collection Accounts, and the ZBA Accounts. "DOCUMENTS" shall mean all "documents" as defined in Article 9 of the UCC. "EQUIPMENT" shall mean: (i) all "equipment" as defined in Article 9 of the UCC, (ii) all machinery, manufacturing equipment, data processing equipment, computers, office equipment, furnishings, furniture, appliances, fixtures and tools (in each case, regardless of whether characterized as equipment under the UCC), (iii) the "People-Mover" as such term is defined in the Mortgage, (iv) all gaming equipment, slot machines, and gaming tables, and (v) all accessions or additions thereto, all parts thereof, whether or not at any time of determination incorporated or installed therein or attached thereto, and all replacements therefor, wherever located, now or hereafter existing, including any fixtures. "EVENT OF DEFAULT" shall mean an Event of Default as defined in the Indenture. "GAMING RELATED ITEMS" shall mean all Accounts deriving solely from gaming activities. "GENERAL INTANGIBLES" (i) shall mean all "general intangibles" as defined in Article 9 of the UCC and (ii) shall include, without limitation, all interest rate or currency protection or hedging arrangements, all tax refunds (including, but not limited to any abatements or refunds of real estate taxes paid for prior periods as a result of successful prosecution or settlement of an appeals procedure or otherwise), all tax claims, all licenses (including, but not limited to the B&B License Agreement), permits, concessions and authorizations, all Assigned Agreements and all Intellectual Property (in each case, regardless of whether characterized as general intangibles under the UCC). "GOODS" (i) shall mean all "goods" as defined in Article 9 of the UCC and (ii) shall include, without limitation, all Inventory and Equipment (in each case, regardless of whether characterized as goods under the UCC). "GOVERNMENTAL AUTHORITY" means any federal, state, municipal, national or other government, governmental department, commission, board, bureau, court, agency or instrumentality or political subdivision thereof or any entity or officer exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to any government or any court, in each case whether associated with a state of the United States, the United States, or a foreign entity or government. "GRANTORS" shall have the meaning set forth in the preamble. 3 "HOLDER" shall have the meaning set forth in the Indenture. "INSTRUMENTS" shall mean all "instruments" as defined in Article 9 of the UCC. "INDENTURE" shall have the meaning set forth in the recitals. "INSURANCE" shall mean: (i) all insurance policies covering any or all of the Collateral (regardless of whether the Secured Party is the loss payee thereof) and (ii) any key man life insurance policies. "INTELLECTUAL PROPERTY" shall mean, collectively, the Copyrights, the Copyright Licenses, the Patents, the Patent Licenses, the Trademarks, the Trademark Licenses (including, but not limited to, all licenses granted under that certain License Agreement, made by and between Las Vegas Sands, Inc. and Greate Bay Hotel and Casino, Inc., executed on or around the date hereof), the Trade Secrets, and the Trade Secret Licenses and in any event shall include all present and future rights, priorities and privileges relating to intellectual property arising under United States, multinational or foreign laws or otherwise. "INVENTORY" shall mean: (i) all "inventory" as defined in Article 9 of the UCC and (ii) all goods held for sale or lease or to be furnished under contracts of service or so leased or furnished, all raw materials, work in process, finished goods, and materials used or consumed in the manufacture, packing, shipping, advertising, selling, leasing, furnishing or production of such inventory or otherwise used or consumed in any Grantor's business; all goods in which any Grantor has an interest in mass or a joint or other interest or right of any kind; and all goods which are returned to or repossessed by any Grantor, all computer programs embedded in any goods and all accessions thereto and products thereof (in each case, regardless of whether characterized as inventory under the UCC). "INVESTMENT ACCOUNTS" shall mean the Securities Accounts, Commodities Accounts and Deposit Accounts. "INVESTMENT RELATED PROPERTY" shall mean: (i) all "investment property" (as such term is defined in Article 9 of the UCC) and (ii) all of the following (regardless of whether classified as investment property under the UCC): all Pledged Equity Interests, Pledged Debt, the Investment Accounts and certificates of deposit. "LETTER OF CREDIT RIGHT" shall mean "letter-of-credit right" as defined in Article 9 of the UCC. "MATERIAL ADVERSE EFFECT" shall mean a material adverse change in the business, prospects, operations, results of operations, assets, liabilities or condition (financial or otherwise) of the Grantors (taken as a whole), (b) the material impairment of the ability of the Grantors (taken as a whole) to perform their Obligations, or of the Secured Party's ability to enforce the Obligations or realize upon a material portion of the Collateral, or (c) a material impairment of the priority of the liens with respect to a material portion of the Collateral as a result of an action or failure to act on the part of any Grantor. "MATERIAL CONTRACTS" means any contract or other arrangement to which a Grantor or any of its Subsidiaries is a party (other than the Indenture and the Notes) for which breach, nonperformance, cancellation or failure to renew could reasonably be expected to have a Material Adverse Effect. "MONEY" shall mean "money" as defined in the UCC. 4 "NON-ASSIGNABLE CONTRACT" shall mean any agreement, contract or license to which any Grantor is a party that by its terms purports to restrict or prevent the assignment or granting of a security interest therein (either by its terms or by any federal or state statutory prohibition or otherwise irrespective of whether such prohibition or restriction is enforceable under Sections 9-406 through 409 of the UCC). "NOTES" shall have the meaning set forth in the Indenture. "OBLIGATIONS" shall mean the principal, interest, fees and any other obligations or liabilities of the Grantors under, arising from, in connection with or relating to the Notes, the Indenture, the Security Documents and this Agreement. "PATENT LICENSES" shall mean all agreements providing for the granting of any right in or to Patents (whether such Grantor is licensee or licensor thereunder) including, without limitation, each agreement referred to in Schedule 4.7(D) (as such schedule may be amended or supplemented from time to time). "PATENTS" shall mean all United States, state and foreign patents and applications for letters patent throughout the world, including, but not limited to each patent and patent application referred to in Schedule 4.7(C) (as such schedule may be amended or supplemented from time to time), all reissues, divisions, continuations, continuations-in-part, extensions, renewals, and reexaminations of any of the foregoing, all rights corresponding thereto throughout the world, and all proceeds of the foregoing including, without limitation, licenses, royalties, income, payments, claims, damages, and proceeds of suit and the right to sue for past, present and future infringements of any of the foregoing. "PLEDGED DEBT" shall mean all Indebtedness owed to such Grantor, including, without limitation, all Indebtedness described on Schedule 4.4(A) under the heading "Pledged Debt" (as such schedule may be amended or supplemented from time to time), issued by the obligors named therein, the instruments evidencing such Indebtedness, and all interest, cash, instruments and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such Indebtedness. "PLEDGED EQUITY INTERESTS" shall mean all Pledged Stock, Pledged LLC Interests, Pledged Partnership Interests and Pledged Trust Interests. "PLEDGED LLC INTERESTS" shall mean all interests in any limited liability company including, without limitation, all limited liability company interests listed on Schedule 4.4(A) under the heading "Pledged LLC Interests" (as such schedule may be amended or supplemented from time to time) and the certificates, if any, representing such limited liability company interests and any interest of such Grantor on the books and records of such limited liability company or on the books and records of any securities intermediary pertaining to such interest and all dividends, distributions, cash, warrants, rights, options, instruments, securities and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such limited liability company interests. "PLEDGED PARTNERSHIP INTERESTS" shall mean all interests in any general partnership, limited partnership, limited liability partnership or other partnership including, without limitation, all partnership interests listed on Schedule 4.4(A) under the heading "Pledged Partnership Interests" (as such schedule may be amended or supplemented from time to time) and the certificates, if any, representing such partnership interests and any interest of such Grantor on the books and records of such partnership or on the books and records of any securities intermediary pertaining to such interest and all dividends, 5 distributions, cash, warrants, rights, options, instruments, securities and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such partnership interests. "PLEDGED TRUST INTERESTS" shall mean all interests in a Delaware business trust or other trust including, without limitation, all trust interests listed on Schedule 4.4(A) under the heading "Pledged Trust Interests" (as such schedule may be amended or supplemented from time to time) and the certificates, if any, representing such trust interests and any interest of such Grantor on the books and records of such trust or on the books and records of any securities intermediary pertaining to such interest and all dividends, distributions, cash, warrants, rights, options, instruments, securities and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such trust interests. "PLEDGED STOCK" shall mean all shares of capital stock owned by such Grantor, including, without limitation, all shares of capital stock described on Schedule 4.4(A) under the heading "Pledged Stock" (as such schedule may be amended or supplemented from time to time), and the certificates, if any, representing such shares and any interest of such Grantor in the entries on the books of the issuer of such shares or on the books of any securities intermediary pertaining to such shares, and all dividends, distributions, cash, warrants, rights, options, instruments, securities and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such shares. "PLEDGE SUPPLEMENT" shall mean any supplement to this agreement in substantially the form of Exhibit A. "PROCEEDS" shall mean: (i) all "proceeds" as defined in Article 9 of the UCC, (ii) payments or distributions made with respect to any Investment Related Property and (iii) whatever is receivable or received when Collateral or proceeds are sold, exchanged, collected or otherwise disposed of, whether such disposition is voluntary or involuntary. "RECEIVABLES" shall mean all rights to payment, whether or not earned by performance, for goods or other property sold, leased, licensed, assigned or otherwise disposed of, or services rendered or to be rendered, including, without limitation all such rights constituting or evidenced by any Account, Chattel Paper, Instrument, General Intangible or Investment Related Property, together with all of Grantor's rights, if any, in any goods or other property giving rise to such right to payment and all Collateral Support and Supporting Obligations related thereto and all Receivables Records. "RECEIVABLES RECORDS" shall mean (i) all original copies of all documents, instruments or other writings or electronic records or other Records evidencing the Receivables, (ii) all books, correspondence, credit or other files, Records, ledger sheets or cards, invoices, and other papers relating to Receivables, including, without limitation, all tapes, cards, computer tapes, computer discs, computer runs, record keeping systems and other papers and documents relating to the Receivables, whether in the possession or under the control of Grantor or any computer bureau or agent from time to time acting for Grantor or otherwise, (iii) all evidences of the filing of financing statements and the registration of other instruments in connection therewith, and amendments, supplements or other modifications thereto, notices to other creditors or secured parties, and certificates, acknowledgments, or other writings, including, without limitation, lien search reports, from filing or other registration officers, (iv) all credit information, reports and memoranda relating thereto and (v) all other written or nonwritten forms of information related in any way to the foregoing or any Receivable. "RECORD" shall have the meaning specified in Article 9 of the UCC. 6 "SECURED OBLIGATIONS" shall have the meaning assigned in Section 3.1. "SECURED PARTY" shall have the meaning set forth in the Recitals. "SECURITIES ACCOUNTS" (i) shall mean all "securities accounts" as defined in Article 8 of the UCC and (ii) shall include, without limitation, all of the accounts listed on Schedule 4.4(A) under the heading "Securities Accounts" (as such schedule may be amended or supplemented from time to time). "SUPPORTING OBLIGATION" shall mean all "supporting obligations" as defined in Article 9 of the UCC. "TAX CODE" shall mean the United States Internal Revenue Code of 1986, as amended from time to time. "TRADEMARK LICENSES" shall mean any and all agreements providing for the granting of any right in or to Trademarks (whether such Grantor is licensee or licensor thereunder) including, without limitation, each agreement referred to in Schedule 4.7(F) (as such schedule may be amended or supplemented from time to time). "TRADEMARKS" shall mean all United States, state and foreign trademarks, trade names, corporate names, company names, business names, fictitious business names, internet domain names, trade styles, service marks, certification marks, collective marks, logos, other source or business identifiers, designs and general intangibles of a like nature, all registrations and applications for any of the foregoing including, but not limited to the registrations and applications referred to in Schedule 4.7(E) (as such schedule may be amended or supplemented from time to time), all extensions or renewals of any of the foregoing, all of the goodwill of the business connected with the use of and symbolized by the foregoing, the right to sue for past, present and future infringement or dilution of any of the foregoing or for any injury to goodwill, and all proceeds of the foregoing, including, without limitation, licenses, royalties, income, payments, claims, damages, and proceeds of suit. "TRADE SECRET LICENSES" shall mean any and all agreements providing for the granting of any right in or to Trade Secrets (whether such Grantor is licensee or licensor thereunder) including, without limitation, each agreement referred to in Schedule 4.7(G) (as such schedule may be amended or supplemented from time to time). "TRADE SECRETS" shall mean all trade secrets and all other confidential or proprietary information and know-how now or hereafter owned or used in, or contemplated at any time for use in, the business of such Grantor (all of the foregoing being collectively called a "Trade Secret"), whether or not such Trade Secret has been reduced to a writing or other tangible form, including all documents and things embodying, incorporating, or referring in any way to such Trade Secret, the right to sue for past, present and future infringement of any Trade Secret, and all proceeds of the foregoing, including, without limitation, licenses, royalties, income, payments, claims, damages, and proceeds of suit. "UNITED STATES" shall mean the United States of America. "ZBA ACCOUNTS" shall mean Deposit Accounts generally maintaining a zero balance at the end of each Business Day and into which funds are deposited only from the Concentration Account and from which funds are withdrawn only to pay creditors, employees, and operating expenses of the Grantors. 7 1.2 DEFINITIONS; INTERPRETATION. All capitalized terms used herein (including the preamble and recitals hereto) and not otherwise defined herein shall have the meanings ascribed thereto in the Indenture or, if not defined therein, in the UCC. References to "Sections," "Exhibits" and "Schedules" shall be to Sections, Exhibits and Schedules, as the case may be, of this Agreement unless otherwise specifically provided. Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect. Any of the terms defined herein may, unless the context otherwise requires, be used in the singular or the plural, depending on the reference. The use herein of the word "include" or "including", when following any general statement, term or matter, shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not nonlimiting language (such as "without limitation" or "but not limited to" or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that fall within the broadest possible scope of such general statement, term or matter. If any conflict or inconsistency exists at any time between this Agreement and the Indenture, the Indenture shall govern. All references herein to provisions of the UCC shall include all successor provisions under any subsequent version or amendment to any Article of the UCC. SECTION 2. GRANT OF SECURITY. 2.1 GRANT OF SECURITY. Each Grantor hereby assigns and transfers to the Secured Party, and hereby grants to the Secured Party, a security interest and continuing lien on all of such Grantor's right, title and interest in, to and under all personal property of such Grantor including, but not limited to the following, in each case whether now owned or existing or hereafter acquired or arising and wherever located (all of which being hereinafter collectively referred to as the "COLLATERAL"): (a) Accounts; (b) Chattel Paper; (c) Documents; (d) General Intangibles; (e) Goods; (f) Instruments; (g) Insurance; (h) Intellectual Property; (i) Investment Related Property; (j) Letter of Credit Rights; (k) Money; (l) Receivables and Receivable Records; (m) Commercial Tort Claims; 8 (n) to the extent not otherwise included above, all Collateral Records, Collateral Support and Supporting Obligations relating to any of the foregoing; and (o) to the extent not otherwise included above, all Proceeds, products, accessions, rents and profits of or in respect of any of the foregoing. 2.2 CERTAIN LIMITED EXCLUSIONS. Notwithstanding anything herein to the contrary, in no event shall the security interest granted under Section 2.1 hereof attach to: (a) any lease, license, contract, property rights or agreement to which any Grantor is a party or any of its rights or interests thereunder if and for so long as the grant of such security interest shall constitute or result in (i) the abandonment, invalidation or unenforceability of any right, title or interest of any Grantor therein or (ii) a breach or termination pursuant to the terms of, or a default under, any such lease, license, contract, property rights or agreement (other than to the extent that any such term would be rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the UCC (or any successor provision or provisions) of any relevant jurisdiction or any other applicable law (including the Bankruptcy Code) or principles of equity); provided, however, that such security interest shall attach immediately at such time as the condition causing such abandonment, invalidation or unenforceability shall be remedied and to the extent severable, shall attach immediately to any portion of such lease, license, contract, property rights or agreement that does not result in any of the consequences specified in (i) or (ii) above; (b) any of the outstanding capital stock of a Controlled Foreign Corporation in excess of 65% of the voting power of all classes of capital stock of such Controlled Foreign Corporation entitled to vote; provided, that immediately upon the amendment of the Tax Code to allow the pledge of a greater percentage of the voting power of capital stock in a Controlled Foreign Corporation without adverse tax consequences, the Collateral shall include, and the security interest granted by each Grantor shall attach to, such greater percentage of capital stock of each Controlled Foreign Corporation; or (c) any CRDA Investments (as defined in the Indenture); and (d) any Gaming Related Items, provided that the security interest granted under Section 2.1 hereof (i) shall attach to the Gaming Related Items to the extent such attachment is not prohibited under the Casino Control Act; and (ii) shall attach to the proceeds of Gaming Related Items to the extent such attachment is not prohibited under the Casino Control Act. SECTION 3. SECURITY FOR OBLIGATIONS; GRANTORS REMAIN LIABLE. 3.1 SECURITY FOR OBLIGATIONS. This Agreement secures, and the Collateral is collateral security for, the prompt and complete payment or performance in full when due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including the payment of amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. ss.362(a) (and any successor provision thereof)), of all Obligations (the "SECURED OBLIGATIONS"). 3.2 CONTINUING LIABILITY UNDER COLLATERAL. Notwithstanding anything herein to the contrary, (i) each Grantor shall remain liable for all obligations under the Collateral and nothing contained herein is intended or shall be a delegation of duties to the Secured Party or any Holder, (ii) each Grantor shall remain liable under each of the agreements included in the Collateral, including, without limitation, any agreements relating to Pledged Partnership Interests or Pledged LLC Interests, to perform all of the obligations undertaken by it thereunder all in accordance with and pursuant to the terms and provisions thereof and neither the Secured Party nor any Holder shall have any obligation or liability under any of 9 such agreements by reason of or arising out of this Agreement or any other document related thereto nor shall the Secured Party nor any Holder have any obligation to make any inquiry as to the nature or sufficiency of any payment received by it or have any obligation to take any action to collect or enforce any rights under any agreement included in the Collateral, including, without limitation, any agreements relating to Pledged Partnership Interests or Pledged LLC Interests, and (iii) the exercise by the Secured Party of any of its rights hereunder shall not release any Grantor from any of its duties or obligations under the contracts and agreements included in the Collateral. 3.3 RELEASE. In accordance and subject to the terms and conditions of Section 1017 of the Indenture, the Grantors may make any Asset Sale (as defined in the Indenture) of Collateral and in connection therewith and subject to the conditions and limitations set forth therein, may obtain from the Secured Party a release of the Collateral subject to such Asset Sale, provided, however, that Collateral Proceeds (as defined therein) (and any earnings thereon) may be released from the Collateral Account only in accordance with Section 1404 of the Indenture. 3.4 SUBORDINATION. Notwithstanding anything else herein to the contrary, the Secured Party agrees, consents, and acknowledges for itself and on behalf of the Holders that the Lien (as defined in the Indenture) of the Secured Party in the Collateral shall be subject to the terms of the Indenture and subject and inferior to any Lien to secure Working Capital Indebtedness (as defined in the Indenture) whether incurred prior to, on or after the Issue Date and that Liens to secure Working Capital Indebtedness shall for all purposes be and be deemed to be superior to the Liens of the Secured Party under this Agreement and under the Security Documents (as defined in the Indenture). SECTION 4. REPRESENTATIONS AND WARRANTIES AND COVENANTS. 4.1 GENERALLY. (a) Representations and Warranties. Each Grantor hereby represents and warrants to the Secured Party that: (i) it owns the Collateral purported to be owned by it or otherwise has the rights it purports to have in each item of Collateral and, as to all Collateral whether now existing or hereafter acquired, will continue to own or have such rights in each item of the Collateral, in each case free and clear of any and all Liens, rights or claims of all other Persons other than Permitted Liens, including, without limitation, liens arising as a result of such Grantor becoming bound (as a result of merger or otherwise) as debtor under a security agreement entered into by another Person; (ii) it has indicated on Schedule 4.1(A) (as such schedule may be amended or supplemented from time to time): (w) the type of organization of such Grantor, (x) the jurisdiction of organization of such Grantor, (y) its organizational identification number and (z) the jurisdiction where the chief executive office or its sole place of business is, and for the one-year period preceding the date hereof has been, located. (iii) the full legal name of such Grantor is as set forth on Schedule 4.1(A) and it has not done in the last five (5) years, and does not do, business under any other name (including any trade-name or fictitious business name) except for those names set forth on Schedule 4.1(B) (as such schedule may be amended or supplemented from time to time);except as provided on Schedule 4.1(C), it has not changed its name, jurisdiction of organization, chief 10 executive office or sole place of business or its corporate structure in any way (e.g., by merger, consolidation, change in corporate form or otherwise) within the past five (5) years; (iv) it has not within the last five (5) years become bound (whether as a result of merger or otherwise) as debtor under a security agreement entered into by another Person, which has not heretofore been terminated other than the agreements identified on Schedule 4.1(D) hereof (as such schedule may be amended or supplemented from time to time); (v) with respect to each agreement identified on Schedule 4.1(D), it has indicated on Schedule 4.1(A) and Schedule 4.1(B) the information required pursuant to Section 4.1(a)(ii), (iii) and (iv) with respect to the debtor under each such agreement; (vi) upon the filing of all UCC financing statements naming each Grantor as debtor and the Secured Party as secured party and describing the Collateral in the filing offices set forth opposite such Grantor's name on Schedule 4.1(E) hereof (as such schedule may be amended or supplemented from time to time) and other filings delivered by each Grantor, and the delivery of an executed control agreement for the Collateral Account and each Deposit Account (other than ZBA Accounts) listed in Schedule 4.4 hereof (as such schedule may be amended or supplemented from time to time) in accordance with Section 4.4.4 hereof, the security interests granted to the Secured Party hereunder in the Collateral (as such schedule may be amended or supplemented from time to time), constitute valid and perfected first priority Liens (subject only to Permitted Liens) on all of the Collateral; (vii) all actions and consents, including all filings, notices, registrations and recordings necessary or desirable for the exercise by the Secured Party of the voting or other rights provided for in this Agreement or the exercise of remedies in respect of the Collateral have been made or obtained; (viii) other than the financing statements filed in favor of the Secured Party, no effective UCC financing statement, fixture filing or other instrument similar in effect under any applicable law covering all or any part of the Collateral is on file in any filing or recording office except for (x) financing statements for which proper termination statements have been delivered to the Secured Party for filing and (y) financing statements filed in connection with Permitted Liens; (ix) no authorization, approval or other action by, and no notice to or filing with, any Governmental Authority or regulatory body is required for either (i) the pledge or grant by any Grantor of the Liens purported to be created in favor of the Secured Party hereunder or (ii) the exercise by Secured Party of any rights or remedies in respect of any Collateral (whether specifically granted or created hereunder or created or provided for by applicable law), except (A) for the filings contemplated by clause (vii) above and (B) as may be required, in connection with the disposition of any Investment Related Property, by laws generally affecting the offering and sale of Securities; (x) all information supplied by any Grantor with respect to any of the Collateral (in each case taken as a whole with respect to any particular Collateral) is accurate and complete in all material respects; (xi) none of the Collateral constitutes, or is the Proceeds of, "farm products" (as defined in the UCC); 11 (xii) it does not own any "as extracted collateral" (as defined in the UCC) or any timber to be cut; (xiii) such Grantor has not become bound as a debtor, either by contract or by operation of law, by a security agreement previously entered into by another Person; and (xiv) such Grantor has been duly organized as an entity of the type as set forth opposite such Grantor's name on Schedule 4.1(A) solely under the laws of the jurisdiction as set forth opposite such Grantor's name on Schedule 4.1(A) and remains duly existing as such. Such Grantor has not filed any certificates of domestication, transfer or continuance in any other jurisdiction. (b) Covenants and Agreements. Each Grantor hereby covenants and agrees with the Secured Party that from and after the date of this Agreement until the payment in full of all Secured Obligations that: (i) except for the security interest created by this Agreement, it shall not create or suffer to exist any Lien upon or with respect to any of the Collateral, except Permitted Liens, and such Grantor shall defend the Collateral against all Persons at any time claiming any interest therein; (ii) it shall not produce, use or permit any Collateral to be used unlawfully or in violation of any provision of this Agreement, the Indenture, or any applicable statute, regulation or ordinance or any policy of insurance covering the Collateral; (iii) it shall not change such Grantor's name, identity, corporate structure (e.g., by merger, consolidation, change in corporate form or otherwise) sole place of business, chief executive office, type of organization, jurisdiction of organization, or state law identification number required for UCC filings, if any, or establish any trade names unless it shall have (a) notified the Secured Party in writing, by executing and delivering to the Secured Party a completed Pledge Supplement, substantially in the form of Exhibit A attached hereto, together with all Supplements to Schedules thereto, at least thirty (30) days prior to any such change or establishment, identifying such new proposed name, identity, corporate structure, sole place of business, chief executive office, jurisdiction of organization, state law identification number, or trade name and providing such other information in connection therewith as the Secured Party may reasonably request and (b) taken all actions necessary or advisable to maintain the continuous validity, perfection and the same or better priority of the Secured Party's security interest in the Collateral intended to be granted and agreed to hereby; (iv) if the Secured Party or any Holder gives value to enable Grantor to acquire rights in or the use of any Collateral, it shall use such value for such purposes and such Grantor further agrees that repayment of any Obligation shall apply on a "first-in, first-out" basis so that the portion of the value used to acquire rights in any Collateral shall be paid in the chronological order such Grantor acquired rights therein; (v) it shall pay promptly when due all property and other taxes, assessments and governmental charges or levies imposed upon, and all claims (including claims for labor, materials and supplies) against, the Collateral, except to the extent the validity thereof is being contested in good faith; provided, such Grantor shall in any event pay such taxes, assessments, charges, levies or claims not later than five (5) days prior to the date of any proposed sale under 12 any judgment, writ or warrant of attachment entered or filed against such Grantor or any of the Collateral as a result of the failure to make such payment; (vi) upon such Grantor or any officer of such Grantor obtaining knowledge thereof, it shall promptly notify the Secured Party in writing of any event that may have a Material Adverse Effect on the value of the Collateral or any portion thereof, the ability of any Grantor or the Secured Party to dispose of the Collateral or any portion thereof, or the rights and remedies of the Secured Party in relation thereto, including, without limitation, the levy of any legal process against the Collateral or any portion thereof; (vii) it shall not take or permit any action which could impair the Secured Party's rights in the Collateral; and (viii) it shall not sell, transfer or assign (by operation of law or otherwise) any Collateral except as set forth in Section 3.3 hereof and Section 1017 of the Indenture. 4.2 EQUIPMENT AND INVENTORY. (a) Representations and Warranties. Each Grantor represents and warrants to the Secured Party that: (i) all of the Equipment and Inventory included in the Collateral is and has been kept for the past five (5) years only at the locations specified in Schedule 4.2 (as such schedule may be amended or supplemented from time to time); (ii) any Goods now or hereafter produced by any Grantor included in the Collateral have been and will be produced in compliance with the requirements of the Fair Labor Standards Act, as amended; and (iii) none of the Inventory or Equipment is in the possession of an issuer of a negotiable document (as defined in Section 7-104 of the UCC) therefor or otherwise in the possession of a bailee or a warehouseman. (iv) the aggregate value of all motor vehicles owned by any Grantor is less than $200,000. (b) Covenants and Agreements. Each Grantor hereby covenants and agrees with the Secured Party that from and after the date of this Agreement until the payment in full of all Secured Obligations that: (i) it shall keep the Equipment, Inventory and any Documents evidencing any Equipment and Inventory in the locations specified on Schedule 4.2 (as such schedule may be amended or supplemented from time to time) unless it shall have (a) notified the Secured Party in writing, by executing and delivering to the Secured Party a completed Pledge Supplement, substantially in the form of Exhibit A attached hereto, together with all Supplements to Schedules thereto, at least thirty (30) days prior to any change in locations, identifying such new locations and providing such other information in connection therewith as the Secured Party may reasonably request and (b) taken all actions necessary or advisable to maintain the continuous validity, perfection and the same or better priority of the Secured Party's security interest in the Collateral intended to be granted and agreed to hereby, or to enable the Secured Party to exercise and enforce its rights and remedies hereunder, with respect to such Equipment and Inventory; 13 (ii) it shall keep correct and accurate records of the Inventory, itemizing and describing the kind, type and quantity of Inventory, such Grantor's cost therefor and (where applicable) the current list prices for the Inventory, in each case, in reasonable detail, as is customarily maintained under similar circumstances by Persons of established reputation engaged in similar business, and in any event in conformity with GAAP; (iii) it shall not deliver any Document evidencing any Equipment and Inventory to any Person other than the issuer of such Document to claim the Goods evidenced therefor or the Secured Party; (iv) if any Equipment or Inventory is in possession or control of any third party, each Grantor shall join with the Secured Party in notifying the third party of the Secured Party's security interest and obtaining an acknowledgment from the third party that it is holding the Equipment and Inventory for the benefit of the Secured Party; and (v) with respect to any item of Equipment which is covered by a certificate of title under a statute of any jurisdiction under the law of which indication of a security interest on such certificate is required as a condition of perfection thereof (A) provide information with respect to any such Equipment in excess of $100,000 individually or $1,000,000 in the aggregate, (B) execute and file with the registrar of motor vehicles or other appropriate authority in such jurisdiction an application or other document requesting the notation or other indication of the security interest created hereunder on such certificate of title, and (C) deliver to the Secured Party copies of all such applications or other documents filed during such calendar quarter and copies of all such certificates of title issued during such calendar quarter indicating the security interest created hereunder in the items of Equipment covered thereby. 4.3 RECEIVABLES. Representations and Warranties. Each Grantor represents and warrants to the Secured Party that: (i) each Receivable has been created in the ordinary course and represents an unsatisfied obligation of the Account Debtor and (a) is and will be the legal, valid and binding obligation of the Account Debtor in respect thereof, representing an unsatisfied obligation of such Account Debtor, (b) is not and will not be subject to any setoffs, defenses, taxes, counterclaims (except with respect to refunds, returns and allowances in the ordinary course of business with respect to damaged merchandise) and (c) is and will be in compliance with all applicable laws, whether federal, state, local or foreign; (ii) none of the Account Debtors in respect of any Receivable is the government of the United States, any agency or instrumentality thereof, any state or municipality or any foreign sovereign. No Receivable requires the consent of the Account Debtor in respect thereof in connection with the pledge hereunder, except any consent which has been obtained; (iii) no Receivable is evidenced by, or constitutes, an Instrument or Chattel Paper which has not been delivered to, or otherwise subjected to the control of, the Secured Party to the extent required by, and in accordance with, Section 4.3(c); and (iv) each Grantor has delivered to the Secured Party a complete and correct copy of each standard form of document under which a Receivable may arise. 14 (b) Covenants and Agreements: Each Grantor hereby covenants and agrees with the Secured Party that from and after the date of this Agreement until the payment in full of all Secured Obligations that: (i) it shall keep and maintain at its own cost and expense satisfactory and complete records of the Receivables, including, but not limited to, the originals of all documentation with respect to all Receivables and records of all payments received and all credits granted on the Receivables, all merchandise returned and all other dealings therewith; (ii) it shall promptly transfer or cause to be transferred all funds arising from the collection of all Receivables (1) to a Collection Account listed on Schedule 4.4(A) hereto (as such schedule may be amended or supplemented from time to time) and (2) in any event, no later than 2 Business Days after transfer to the Collection Account in clause (1) above, to a Concentration Account listed on Schedule 4.4(A) hereto (as such schedule may be amended or supplemented from time to time). (iii) it shall mark conspicuously, in form and manner reasonably satisfactory to the Secured Party, all Chattel Paper, Instruments and other evidence of Receivables (other than any delivered to the Secured Party as provided herein), as well as the Receivables Records with an appropriate reference to the fact that the Secured Party has a security interest therein; (iv) it shall perform in all material respects all of its obligations with respect to the Receivables; (v) it shall not amend, modify, terminate or waive any provision of any Receivable in any manner which could reasonably be expected to have a Material Adverse Effect on the value of such Receivable as Collateral. Other than in the ordinary course of business as generally conducted by it on and prior to the date hereof, and except as otherwise provided in subsection (v) below, following an Event of Default, such Grantor shall not (w) grant any extension or renewal of the time of payment of any Receivable, (x) compromise or settle any dispute, claim or legal proceeding with respect to any Receivable for less than the total unpaid balance thereof, (y) release, wholly or partially, any Person liable for the payment thereof, or (z) allow any credit or discount thereon; (vi) except as otherwise provided in this subsection, each Grantor shall continue to collect all amounts due or to become due to such Grantor under the Receivables and any Supporting Obligation and diligently exercise each material right it may have under any Receivable, any Supporting Obligation or Collateral Support, in each case, at its own expense, and in connection with such collections and exercise, such Grantor shall take such action as such Grantor or the Secured Party may deem necessary or advisable. Notwithstanding the foregoing, the Secured Party shall have the right at any time to notify, or require any Grantor to notify (and if so, such Grantor shall so notify), any Account Debtor of the Secured Party's security interest in the Receivables and any Supporting Obligation and, in addition, at any time following the occurrence and during the continuation of an Event of Default, the Secured Party may: (1) direct the Account Debtors under any Receivables to make payment of all amounts due or to become due to such Grantor thereunder directly to the Secured Party; (2) notify, or require any Grantor to notify, each Person maintaining a lockbox or similar arrangement to which Account Debtors under any Receivables have been directed to make payment to remit all amounts representing collections on checks and other payment items from time to time sent to or deposited in such lockbox or other arrangement directly to the Secured Party; and (3) enforce, at the expense of such Grantor, collection of any such Receivables and to adjust, settle or compromise the amount 15 or payment thereof, in the same manner and to the same extent as such Grantor might have done; provided, the Secured Party shall not take any of the actions set forth in this sentence if and to the extent that such action is prohibited under any federal or state law. If the Secured Party notifies any Grantor that it has elected to collect the Receivables in accordance with the preceding sentence, any payments of Receivables received by such Grantor shall be forthwith (and in any event within two (2) Business Days) deposited by such Grantor in the exact form received, duly indorsed by such Grantor to the Secured Party if required, in a Collection Account maintained under the sole dominion and control of the Secured Party, and until so turned over, all amounts and proceeds (including checks and other instruments) received by such Grantor in respect of the Receivables, any Supporting Obligation or Collateral Support shall be received in trust for the benefit of the Secured Party hereunder and shall be segregated from other funds of such Grantor and such Grantor shall not adjust, settle or compromise the amount or payment of any Receivable, or release wholly or partly any Account Debtor or obligor thereof, or allow any credit or discount thereon; (vii) it shall use its best efforts to keep in full force and effect any Supporting Obligation or Collateral Support relating to any Receivable. (c) Delivery and Control of Receivables. With respect to any Receivables in excess of $100,000 individually or $1,000,000 in the aggregate that are evidenced by, or constitute, Chattel Paper or Instruments, each Grantor shall cause each originally executed copy thereof to be delivered to the Secured Party (or its agent or designee) appropriately indorsed to the Secured Party or indorsed in blank: (i) with respect to any such Receivables in existence on the date hereof, on or prior to the date hereof and (ii) with respect to any such Receivables hereafter arising, within ten (10) days of such Grantor acquiring rights therein. With respect to any Receivables in excess of $100,000 individually or $1,000,000 in the aggregate which would constitute "electronic chattel paper" under Article 9 of the UCC, each Grantor shall take all steps necessary to give the Secured Party control over such Receivables (within the meaning of Section 9-105 of the UCC): (i) with respect to any such Receivables in existence on the date hereof, on or prior to the date hereof and (ii) with respect to any such Receivables hereafter arising, within ten (10) days of such Grantor acquiring rights therein. Any Receivable not otherwise required to be delivered or subjected to the control of the Secured Party in accordance with this subsection (c) shall be delivered or subjected to such control upon request of the Secured Party. 4.4 INVESTMENT RELATED PROPERTY. 4.4.1 INVESTMENT RELATED PROPERTY GENERALLY (a) Covenants and Agreements. Each Grantor hereby covenants and agrees with the Secured Party that from and after the date of this Agreement until the payment in full of all Secured Obligations that: (i) in the event it acquires rights in any Investment Related Property after the date hereof, it shall deliver to the Secured Party a completed Pledge Supplement, substantially in the form of Exhibit A attached hereto, together with all Supplements to Schedules thereto, reflecting such new Investment Related Property and all other Investment Related Property. Notwithstanding the foregoing, it is understood and agreed that the security interest of the Secured Party shall attach to all Investment Related Property immediately upon any Grantor's acquisition of rights therein and shall not be affected by the failure of any Grantor to deliver a supplement to Schedule 4.4 as required hereby; 16 (ii) in the event such Grantor receives any dividends, interest or distributions on any Investment Related Property, or any securities or other property upon the merger, consolidation, liquidation or dissolution of any issuer of any Investment Related Property, then (a) such dividends, interest or distributions and securities or other property shall be included in the definition of Collateral without further action and (b) such Grantor shall immediately take all steps, if any, necessary or advisable to ensure the validity, perfection, priority and, if applicable, control of the Secured Party over all of the foregoing, including, without limitation, such Investment Related Property (including, without limitation, delivery thereof to the Secured Party) and pending any such action such Grantor shall be deemed to hold such dividends, interest, distributions, securities or other property in trust for the benefit of the Secured Party and shall be segregated from all other property of such Grantor; and (iii) each Grantor consents to the grant by each other Grantor of a Security Interest in all Investment Related Property to the Secured Party. (b) Delivery and Control. Each Grantor agrees that, with respect to any Investment Related Property in which it currently has rights it shall comply with the provisions of this Section 4.4 on or before the Issue Date and that, with respect to any Investment Related Property hereafter acquired by such Grantor it shall comply with the provisions of this Section 4.4 immediately upon acquiring rights therein, in each case in form and substance satisfactory to the Secured Party. With respect to any Investment Related Property that is represented by a certificate or that is an "instrument" (other than any Investment Related Property credited to a Securities Account) it shall cause such certificate or instrument to be delivered to the Secured Party, indorsed in blank by an "effective indorsement" (as defined in Section 8-107 of the UCC), regardless of whether such certificate constitutes a "certificated security" for purposes of the UCC. With respect to any Investment Related Property that is an "uncertificated security" for purposes of the UCC (other than any "uncertificated securities" credited to a Securities Account), it shall cause the issuer of such uncertificated security to either (i) register the Secured Party as the registered owner thereof on the books and records of the issuer or (ii) execute an uncertificated securities control agreement in form acceptable to the Secured Party, pursuant to which such issuer agrees to comply with the Secured Party's instructions with respect to such uncertificated security without further consent by such Grantor. (c) Voting and Distributions. (i) So long as no Event of Default shall have occurred and be continuing: (1) except as otherwise provided under the covenants and agreements relating to Investment Related Property in this Agreement or elsewhere herein or in the Indenture, each Grantor shall be entitled to exercise or refrain from exercising any and all voting and other consensual rights pertaining to the Investment Related Property or any part thereof for any purpose not inconsistent with the terms of this Agreement or the Indenture; and (2) the Secured Party shall promptly execute and deliver (or cause to be executed and delivered) to each Grantor all proxies, and other instruments as such Grantor may from time to time reasonably request for the purpose of enabling such Grantor to exercise the voting and other consensual rights when and to the extent which it is entitled to exercise pursuant to clause (A) above; 17 (ii) Upon the occurrence and during the continuation of an Event of Default: (1) all rights of each Grantor to exercise or refrain from exercising the voting and other consensual rights which it would otherwise be entitled to exercise pursuant hereto shall cease and all such rights shall thereupon become vested in the Secured Party who shall thereupon have the sole right to exercise such voting and other consensual rights; and (2) in order to permit the Secured Party to exercise the voting and other consensual rights which it may be entitled to exercise pursuant hereto and to receive all dividends and other distributions which it may be entitled to receive hereunder: (a) each Grantor shall promptly execute and deliver (or cause to be executed and delivered) to the Secured Party all proxies, dividend payment orders and other instruments as the Secured Party may from time to time reasonably request and (b) the each Grantor acknowledges that the Secured Party may utilize the power of attorney set forth in Section 6. 4.4.2 PLEDGED EQUITY INTERESTS (a) Representations and Warranties. Each Grantor hereby represents and warrants to the Secured Party that: (i) Schedule 4.4(A) (as such schedule may be amended or supplemented from time to time) sets forth under the headings "Pledged Stock, "Pledged LLC Interests," "Pledged Partnership Interests" and "Pledged Trust Interests," respectively, all of the Pledged Stock, Pledged LLC Interests, Pledged Partnership Interests and Pledged Trust Interests owned by any Grantor and such Pledged Equity Interests constitute the percentage of issued and outstanding shares of stock, percentage of membership interests, percentage of partnership interests or percentage of beneficial interest of the respective issuers thereof indicated on such Schedule; (ii) except as set forth on Schedule 4.4(B), it has not acquired any equity interests of another entity or substantially all the assets of another entity within the past five (5) years; (iii) it is the record and beneficial owner of the Pledged Equity Interests free of all Liens, rights or claims of other Persons other than Permitted Liens and there are no outstanding warrants, options or other rights to purchase, or shareholder, voting trust or similar agreements outstanding with respect to, or property that is convertible into, or that requires the issuance or sale of, any Pledged Equity Interests; (iv) without limiting the generality of Section 4.1(a)(viii), no consent of any Person including any other general or limited partner, any other member of a limited liability company, any other shareholder or any other trust beneficiary is necessary or desirable in connection with the creation, perfection or first priority status of the security interest of the Secured Party in any Pledged Equity Interests or the exercise by the Secured Party of the voting or other rights provided for in this Agreement or the exercise of remedies in respect thereof; (v) none of the Pledged LLC Interests nor Pledged Partnership Interests are held in a securities account or represent interests in issuers that are: (a) registered as investment companies, (b) are dealt in or traded on securities exchanges or markets, (c) have opted to be treated as securities under the uniform commercial code of any jurisdiction; 18 (b) Covenants and Agreements. Each Grantor hereby covenants and agrees with the Secured Party that from and after the date of this Agreement until the payment in full of all Secured Obligations that: (i) without the prior written consent of the Secured Party, it shall not vote to enable or take any other action to: (a) amend or terminate any partnership agreement, limited liability company agreement, certificate of incorporation, by-laws or other organizational documents in any way that materially changes the rights of such Grantor with respect to any Investment Related Property or adversely affects the validity, perfection or priority of the Secured Party's security interest, (b) permit any issuer of any Pledged Equity Interest to issue any additional stock, partnership interests, limited liability company interests or other equity interests of any nature or to issue securities convertible into or granting the right of purchase or exchange for any stock or other equity interest of any nature of such issuer, (c) other than as permitted under the Indenture, permit any issuer of any Pledged Equity Interest to dispose of all or a material portion of their assets, (d) waive any default under or breach of any terms of organizational document relating to the issuer of any Pledged Equity Interest or the terms of any Pledged Debt, or (e) cause any issuer of any Pledged Partnership Interests or Pledged LLC Interests which are not securities (for purposes of the UCC) on the date hereof to elect or otherwise take any action to cause such Pledged Partnership Interests or Pledged LLC Interests to be treated as securities for purposes of the UCC; provided, however, notwithstanding the foregoing, if any issuer of any Pledged Partnership Interests or Pledged LLC Interests takes any such action in violation of the foregoing in this clause (e), such Grantor shall promptly notify the Secured Party in writing of any such election or action and, in such event, shall take all steps necessary or advisable to establish the Secured Party's "control" thereof; (ii) it shall comply with all of its obligations under any partnership agreement or limited liability company agreement relating to Pledged Partnership Interests or Pledged LLC Interests and shall enforce all of its rights with respect to any Investment Related Property; (iii) without the prior written consent of the Secured Party, it shall not permit any issuer of any Pledged Equity Interest to merge or consolidate unless (i) the surviving or resulting entity becomes bound as a Grantor hereunder and the security interest of the Secured Party in collateral in which such new Grantor has or acquires rights is perfected by a filed financing statement (that is not effective solely under section 9-508 of the UCC) and (ii) all the outstanding capital stock or other equity interests of the surviving or resulting corporation, limited liability company, partnership or other entity is, upon such merger or consolidation, pledged hereunder and no cash, securities or other property is distributed in respect of the outstanding equity interests of any other constituent Grantors; provided, that if the surviving or resulting Grantors upon any such merger or consolidation involving an issuer which is a Controlled Foreign Corporation, then such Grantor shall only be required to pledge equity interests in accordance with Section 2.2; (iv) each Grantor consents to the grant by each other Grantor of a security interest in all Investment Related Property to the Secured Party and, without limiting the foregoing, consents to the transfer of any Pledged Partnership Interest and any Pledged LLC Interest to the Secured Party or its nominee following an Event of Default and to the substitution of the Secured Party or its nominee as a partner in any partnership or as a member in any limited liability company with all the rights and powers related thereto; and 19 (v) it shall notify the Secured Party of any default under any Pledged Debt that has caused, either in any case or in the aggregate, a Material Adverse Effect. (c) In addition, as provided in Section 4.4.1(c), the provisions of Section 4.4.1(c) shall apply to Pledged Equity Interests. 4.4.3 PLEDGED DEBT (a) Representations and Warranties. Each Grantor hereby represents and warrants to the Secured Party that Schedule 4.4 (as such schedule may be amended or supplemented from time to time) sets forth under the heading "Pledged Debt" all of the Pledged Debt owned by any Grantor and all of such Pledged Debt has been duly authorized, authenticated or issued, and delivered and is the legal, valid and binding obligation of the issuers thereof and is not in default and constitutes all of the issued and outstanding inter-company Indebtedness evidenced by an instrument or certificated security of the respective issuers thereof owing to such Grantor; (b) Covenants and Agreements. Each Grantor hereby covenants and agrees that it shall notify the Secured Party of any default under any Pledged Debt that has caused, either in any case or in the aggregate, a Material Adverse Effect. 4.4.4 INVESTMENT ACCOUNTS (a) Representations and Warranties. Each Grantor hereby represents and warrants to the Secured Party that: (i) Schedule 4.4 hereto (as such schedule may be amended or supplemented from time to time) sets forth under the headings "Securities Accounts" and "Commodities Accounts," respectively, all of the Securities Accounts and Commodities Accounts in which each Grantor has an interest. Each Grantor is the sole entitlement holder of each Securities Account and Commodities Account opposite its name, and such Grantor has not consented to, and is not otherwise aware of, any Person (other than the Secured Party pursuant hereto) having "control" (within the meanings of Sections 8-106 and 9-106 of the UCC) over, or any other interest in, any such Securities Account or Commodity Account or any securities or other property credited thereto; (ii) Schedule 4.4(A) hereto (as such schedule may be amended or supplemented from time to time) sets forth under the heading "Deposit Accounts: Concentration Accounts" all of the Concentration Accounts in which each Grantor has an interest, and Schedule 4.4(A) hereto (as such schedule may be amended or supplemented from time to time) sets forth under the headings "Deposit Accounts: Collection Account", "Deposit Accounts: Collateral Account", "Deposit Accounts: ZBA Accounts", and "Deposit Accounts: Others," respectively, all Deposit Accounts (other than Concentration Accounts) in which each Grantor has an interest. Each Grantor is the sole account holder of each Deposit Account listed on Schedule 4.4(A) opposite its name and such Grantor has not consented to, and is not otherwise aware of, any Person (other than the Trustee pursuant hereto) having either sole dominion and control (within the meaning of common law) or "control" (within the meaning of Section 9-104 of the UCC) over, or any other interest in, any such Deposit Account or any money or other property deposited therein; and (iii) each Grantor has taken all actions necessary or desirable, including those specified in Section 4.4(b) to: (a) establish the Secured Party's "control" (within the meanings of 20 Sections 8-106 and 9-106 or 9-104, as applicable of the UCC) over any portion of the Investment Related Property constituting certificated securities, uncertificated securities, Securities Accounts, securities entitlements, Concentration Accounts, Collection Accounts or Commodities Accounts (each as defined herein, or if not defined herein, as defined in the UCC); (b) establish the Secured Party's "control" (within the meaning of Section 9-104 of the UCC) over all Deposit Accounts (other than ZBA Accounts); and (d) to deliver all Instruments to the Secured Party. (b) Covenants and Agreement. Each Grantor hereby covenants and agrees with the Secured Party that from and after the date of this Agreement until the payment in full of all Secured Obligations that it shall not close or terminate any Deposit Account (other than ZBA Accounts) without the prior consent of the Secured Party and unless a successor or replacement account has been established with the consent of the Secured Party with respect to which successor or replacement account such Grantor has taken all actions necessary to comply with the provisions of Section 4.4.4(c). The Company hereby covenants and agrees that the Deposit Account numbered 9429354435 held by Fleet National Bank in the name of the Company, shall not, at any time, hold greater than $1,000.00. (c) Delivery and Control (i) Each Grantor agrees that, with respect to any Investment Related Property in which it currently has rights it shall comply with the provisions of this Section 4.4.4(c) on or before the Issue Date and, with respect to any Investment Related Property hereafter acquired by such Grantor, it shall comply with the provisions of this Section 4.4.4(c) immediately upon acquiring rights therein. With respect to any Investment Related Property consisting of Securities Accounts, Securities Entitlements, Commodities Accounts, or Deposit Accounts (other than ZBA Accounts), it shall cause the securities intermediary or depositary institution, as the case may be, maintaining such Securities Account, Securities Entitlement, Commodities Accounts, or Deposit Accounts (other than ZBA Accounts), to enter into an agreement substantially in the form of Exhibit C hereto pursuant to which it shall agree to comply with the Secured Party's "entitlement orders" or "instructions", as the case may be, without further consent by such Grantor. Each Grantor shall have entered into such control agreement or agreements with respect to: (i) any Securities Accounts, Securities Entitlements, Commodities Accounts, or Deposit Accounts (other than ZBA Accounts), that exist on the Issue Date, as of or prior to the Issue Date, and (ii) any Securities Accounts, Securities Entitlements, Commodities Accounts, or Deposit Accounts (other than ZBA Accounts), that are created or acquired after the Issue Date, as of or prior to the deposit or transfer of any such Securities Entitlements or funds, whether constituting moneys or investments, into such Securities Accounts, Concentration Accounts, Commodities Accounts, or Deposit Accounts (other than ZBA Accounts). In addition to the foregoing, if any issuer of any Investment Related Property is located in a jurisdiction outside of the United States, each Grantor shall take such additional actions, including, without limitation, causing the issuer to register the pledge on its books and records or making such filings or recordings, in each case as may be necessary or advisable, under the laws of such issuer's jurisdiction to insure the validity, perfection and priority of the security interest of the Secured Party. Upon the occurrence of an Event of Default, the Secured Party shall have the right, without notice to any Grantor, to transfer all or any portion of the Investment Related Property to its name or the name of its nominee or agent. In addition, the Secured Party shall have the right at any time, without notice to any Grantor, to exchange any certificates or instruments representing any Investment Related Property for certificates or instruments of smaller or larger denominations. 21 4.5 MATERIAL CONTRACTS. (a) Representations and Warranties. Each Grantor hereby represents and warrants to the Secured Party that: (i) Schedule 4.5 (as such schedule may be amended or supplemented from time to time) sets forth all of the Material Contracts to which such Grantor has rights; (ii) the Material Contracts have been duly authorized, executed and delivered by all parties thereto, are in full force and effect and are binding upon and enforceable against all parties thereto in accordance with their respective terms. There exists no default under any Material Contract by any party thereto and neither such Grantor, nor to its best knowledge, any other Person party thereto is likely to become in default thereunder and no Person party thereto has any defenses, counterclaims or right of set-off with respect to any Material Contract. Each Person party to a Material Contract (other than any Grantor), whose consent is required for assignment thereof, has executed and delivered to the applicable Grantor a consent to the assignment of such Material Contract to the Secured Party pursuant to this Agreement; and (iii) no Material Contract prohibits assignment or requires consent of or notice to any Person in connection with the assignment to the Secured Party hereunder, except such as has been given or made. (b) Covenants and Agreements. Each Grantor hereby covenants and agrees that: (i) in addition to any rights under the Section of this Agreement relating to Receivables, the Secured Party may at any time notify, or require any Grantor to so notify, the counterparty on any Material Contract of the security interest of the Secured Party therein; provided, the Secured Party shall not take any of the actions set forth in this sentence if and to the extent such action is prohibited under any federal or state law. In addition, after the occurrence and during the continuance of an Event of Default, the Secured Party may upon written notice to the applicable Grantor, notify, or require any Grantor to notify, the counterparty to make all payments under the Material Contracts directly to the Secured Party; (ii) each Grantor shall deliver promptly to the Secured Party a copy of each material demand, notice or document received by it relating in any way to any Material Contract; (iii) each Grantor shall deliver promptly to the Secured Party, and in any event within ten (10) Business Days, after (1) any Material Contract of such Grantor is terminated or amended in a manner that is materially adverse to such Grantor or (2) any new Material Contract is entered into by such Grantor, a written statement describing such event, with copies of such material amendments or new contracts, delivered to the Secured Party (to the extent such delivery is permitted by the terms of any such Material Contract, provided, no prohibition on delivery shall be effective if it were bargained for by such Grantor with the intent of avoiding compliance with this Section 4.5(b)(iii)), and an explanation of any actions being taken with respect thereto; (iv) it shall perform in all material respects all of its obligations with respect to the Material Contracts; (v) it shall promptly and diligently exercise each material right (except the right of termination) it may have under any Material Contract, any Supporting Obligation or Collateral Support, in each case, at its own expense, and in connection with such collections and 22 exercise, such Grantor shall take such action as such Grantor or the Secured Party may deem necessary or advisable; (vi) it shall use its best efforts to keep in full force and effect any Supporting Obligation or Collateral Support relating to any Material Contract; (vii) with respect to any agreement, contract or license to which any Grantor is a party that prevents the assignment or granting of a security interest therein (either by its terms or by any federal or state statutory prohibition or otherwise) (any such agreement, contract or license, a "NON-ASSIGNABLE CONTRACT"), each Grantor shall, within thirty (30) days of the date hereof with respect to any Non-Assignable Contract in effect on the date hereof and within thirty (30) days after entering into any Non-Assignable Contract after the Issue Date, request in writing the consent of the counterparty or counterparties to the Non-Assignable Contract pursuant to the terms of such Non-Assignable Contract or applicable law to the assignment or granting of a security interest in such Non-Assignable Contract to Secured Party and use its best efforts to obtain such consent as soon as practicable thereafter; and (viii) At the request of the Secured Party at any time after the date hereof, ACE shall execute and deliver a mortgage and security agreement, in recordable form and otherwise in form and substance acceptable to the Secured Party, pursuant to which ACE grants to the Secured Party a first priority lien on and security interest in ACE's right, title and interest as lessee/licensee under the B&B License Agreement. In connection therewith, ACE shall execute and/or deliver or cause to be executed and/or delivered to the Secured Party such other documents and agreements, including without limitation an affidavit of title, a lessor's estoppel certificate from ACE's lessor/licensor and any other documents that would normally and customarily be required by a secured party receiving a leasehold mortgage in an arm's-length transaction, as shall be reasonably required by the Secured Party in order to effectuate, implement, confirm or secure the arrangement evidenced by such mortgage and security agreement. All costs in connection with such mortgage and security agreement shall be paid by ACE. 4.6 LETTER OF CREDIT RIGHTS. (a) Representations and Warranties. Each Grantor hereby represents and warrants to the Secured Party that: (i) all material letters of credit to which such Grantor has rights is listed on Schedule 4.6 (as such schedule may be amended or supplemented from time to time) hereto; and (ii) it has obtained the consent of each issuer of any material letter of credit to the assignment of the proceeds of the letter of credit to the Secured Party. (b) Covenants and Agreements. Each Grantor hereby covenants and agrees with the Secured Party that from and after the date of this Agreement until the payment in full of all Secured Obligations that with respect to any material letter of credit hereafter arising it shall obtain the consent of the issuer thereof to the assignment of the proceeds of the letter of credit to the Secured Party and shall deliver to the Secured Party a completed Pledge Supplement, substantially in the form of Exhibit A attached hereto, together with all Supplements to Schedules thereto. 23 4.7 INTELLECTUAL PROPERTY. (a) Representations and Warranties. Except as disclosed in Schedule 4.7(H) (as such schedule may be amended or supplemented from time to time), each Grantor hereby represents and warrants to the Secured Party that: (i) Schedule 4.7 (as such schedule may be amended or supplemented from time to time) sets forth a true and complete list of (i) all United States, state and foreign registrations of and applications for Patents, Trademarks, and Copyrights owned by each Grantor and (ii) all Patent Licenses, Trademark Licenses and Copyright Licenses material to the business of such Grantor; (ii) it is the sole and exclusive owner of the entire right, title, and interest in and to all Intellectual Property on Schedule 4.7 (as such schedule may be amended or supplemented from time to time), and owns or has the valid right to use all other Intellectual Property used in or necessary to conduct its business, free and clear of all Liens, claims, encumbrances and licenses, except for Permitted Liens and the licenses set forth on Schedule 4.7(B), (D), (F) and (G) (as each may be amended or supplemented from time to time); (iii) all Intellectual Property is subsisting and has not been adjudged invalid or unenforceable, in whole or in part, and each Grantor has performed all acts and has paid all renewal, maintenance, and other fees and taxes required to maintain each and every registration and application of Intellectual Property in full force and effect; (iv) all Intellectual Property is valid and enforceable; no holding, decision, or judgment has been rendered in any action or proceeding before any court or administrative authority challenging the validity of, such Grantor's right to register, or such Grantor's rights to own or use, any Intellectual Property and no such action or proceeding is pending or, to the best of such Grantor's knowledge, threatened; (v) all registrations and applications for Copyrights, Patents and Trademarks are standing in the name of each Grantor, and none of the Trademarks, Patents, Copyrights or Trade Secret Collateral has been licensed by any Grantor to any affiliate or third party, except as disclosed in Schedule 4.7(B), (D), (F), or (G) (as each may be amended or supplemented from time to time); (vi) each Grantor has been using appropriate statutory notice of registration in connection with its use of registered Trademarks, proper marking practices in connection with the use of Patents, and appropriate notice of copyright in connection with the publication of Copyrights material to the business of such Grantor; (vii) each Grantor uses adequate standards of quality in the manufacture, distribution, and sale of all products sold and in the provision of all services rendered under or in connection with all Trademark Collateral and has taken all action necessary to insure that all licensees of the Trademark Collateral owned by such Grantor use such adequate standards of quality; (viii) the conduct of such Grantor's business does not infringe upon any trademark, patent, copyright, trade secret or similar intellectual property right owned or controlled by a third party; no claim has been made that the use of any Intellectual Property owned or used by Grantor (or any of its respective licensees) violates the asserted rights of any third party; 24 (ix) to the best of each Grantor's knowledge, no third party is infringing upon any Intellectual Property owned or used by such Grantor, or any of its respective licensees; (x) no settlement or consents, covenants not to sue, nonassertion assurances, or releases have been entered into by Grantor or to which Grantor is bound that adversely effect Grantor's rights to own or use any Intellectual Property; and (xi) each Grantor has not made a previous assignment, sale, transfer or agreement constituting a present or future assignment, sale, transfer or agreement of any Intellectual Property that has not been terminated or released. There is no effective financing statement or other document or instrument now executed, or on file or recorded in any public office, granting a security interest in or otherwise encumbering any part of the Intellectual Property, other than in favor of the Secured Party. (b) Covenants and Agreements. Each Grantor hereby covenants and agrees with the Secured Party that from and after the date of this Agreement until the payment in full of all Secured Obligations that: (i) it shall not do any act or omit to do any act whereby any of the Intellectual Property which is material to the business of Grantor may lapse, or become abandoned, dedicated to the public, or unenforceable, or which would adversely affect the validity, grant, or enforceability of the security interest granted therein; (ii) it shall not, with respect to any Trademarks which are material to the business of any Grantor, cease the use of any of such Trademarks or fail to maintain the level of the quality of products sold and services rendered under any of such Trademark at a level at least substantially consistent with the quality of such products and services as of the date hereof, and each Grantor shall take all steps necessary to insure that licensees of such Trademarks use such consistent standards of quality; (iii) it shall, within thirty (30) days of the creation or acquisition of any copyrightable work which is material to the business of Grantor, apply to register the Copyright in the United States Copyright Office; (iv) it shall promptly notify the Secured Party if it knows or has reason to know that any item of the Intellectual Property that is material to the business of any Grantor may become (a) abandoned or dedicated to the public or placed in the public domain, (b) invalid or unenforceable, or (c) subject to any adverse determination or development (including the institution of proceedings) in any action or proceeding in the United States Patent and Trademark Office, the United States Copyright Office, and state registry, any foreign counterpart of the foregoing, or any court; (v) it shall take all reasonable steps in the United States Patent and Trademark Office, the United States Copyright Office, any state registry or any foreign counterpart of the foregoing, to pursue any application and maintain any registration of each Trademark, Patent, and Copyright owned by any Grantor and material to its business which is now or shall become included in the Intellectual Property (except for such works with respect to which such Grantor has determined in the exercise of its commercially reasonable judgment that it shall not seek registration) including, but not limited to, those items on Schedule 4.7(A), (C) and (E) (as each may be amended or supplemented from time to time); 25 (vi) in the event that any Intellectual Property owned by or exclusively licensed to any Grantor is infringed, misappropriated, or diluted by a third party, such Grantor shall promptly take all reasonable actions to stop such infringement, misappropriation, or dilution and protect its exclusive rights in such Intellectual Property including, but not limited to, the initiation of a suit for injunctive relief and to recover damages; (vii) it shall promptly (but in no event more than thirty (30) days after any Grantor obtains knowledge thereof) report to the Secured Party (i) the filing of any application to register any Intellectual Property with the United States Patent and Trademark Office, the United States Copyright Office, or any state registry or foreign counterpart of the foregoing (whether such application is filed by such Grantor or through any agent, employee, licensee, or designee thereof) and (ii) the registration of any Intellectual Property by any such office, in each case by executing and delivering to the Secured Party a completed Pledge Supplement, substantially in the form of Exhibit A attached hereto, together with all Supplements to Schedules thereto; (viii) it shall, promptly upon the reasonable request of the Secured Party, execute and deliver to the Secured Party any document required to acknowledge, confirm, register, record, or perfect the Secured Party's interest in any part of the Intellectual Property, whether now owned or hereafter acquired; (ix) except with the prior consent of the Secured Party or as permitted under the Indenture, each Grantor shall not execute, and there will not be on file in any public office, any financing statement or other document or instruments, except financing statements or other documents or instruments filed or to be filed in favor of the Secured Party and each Grantor shall not sell, assign, transfer, license, grant any option, or create or suffer to exist any Lien upon or with respect to the Intellectual Property, except for the Lien created by and under this Agreement the Notes, the Indenture, and the other Security Documents (as defined in the Indenture); (x) it shall hereafter use commercially reasonable efforts so as not to permit the inclusion in any contract to which it hereafter becomes a party of any provision that could or might in any way materially impair or prevent the creation of a security interest in, or the assignment of, such Grantor's rights and interests in any property included within the definitions of any Intellectual Property acquired under such contracts; (xi) it shall take all steps reasonably necessary to protect the secrecy of all trade secrets relating to the products and services sold or delivered under or in connection with the Intellectual Property, including, without limitation, entering into confidentiality agreements with employees and labeling and restricting access to secret information and documents; (xii) it shall use proper statutory notice in connection with its use of any of the Intellectual Property; and (xiii) it shall continue to collect, at its own expense, all amounts due or to become due to such Grantor in respect of the Intellectual Property or any portion thereof. In connection with such collections, each Grantor may take (and, at the Secured Party's reasonable direction, shall take) such action as such Grantor or the Secured Party may deem reasonably necessary or advisable to enforce collection of such amounts. Notwithstanding the foregoing, the Secured Party shall have the right at any time, to notify, or require any Grantor to notify, any obligors with respect to any such amounts of the existence of the security interest created hereby. 26 4.8 COMMERCIAL TORT CLAIMS (a) Representations and Warranties. Each Grantor hereby represents and warrants to the Secured Party that Schedule 4.8 (as such schedule may be amended or supplemented from time to time) sets forth all Commercial Tort Claims of each Grantor in excess of $100,000 individually or $1,000,000 in the aggregate; and (b) Covenants and Agreements. Each Grantor hereby covenants and agrees with the Secured Party that from and after the date of this Agreement until the payment in full of all Secured Obligations, the cancellation or termination of the Commitments and the cancellation or expiration of all outstanding letters of credit that with respect to any Commercial Tort Claim in excess of $100,000 individually or $1,000,000 in the aggregate hereafter arising it shall deliver to the Secured Party a completed Pledge Supplement, substantially in the form of Exhibit A attached hereto, together with all Supplements to Schedules thereto, identifying such new Commercial Tort Claims. SECTION 5. ACCESS; RIGHT OF INSPECTION AND FURTHER ASSURANCES; ADDITIONAL GRANTORS. 5.1 ACCESS; RIGHT OF INSPECTION. The Secured Party shall at all times have full and free access during normal business hours to all the books, correspondence and records of each Grantor, and the Secured Party and its representatives may examine the same, take extracts therefrom and make photocopies thereof, and each Grantor agrees to render to the Secured Party, at such Grantor's cost and expense, such clerical and other assistance as may be reasonably requested with regard thereto. The Secured Party and its representatives shall at all times also have the right to enter any premises of each Grantor and inspect any property of each Grantor where any of the Collateral of such Grantor granted pursuant to this Agreement is located for the purpose of inspecting the same, observing its use or otherwise protecting its interests therein. 5.2 FURTHER ASSURANCES. (a) Each Grantor agrees that from time to time, at the expense of such Grantor, that it shall promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or desirable, or that the Secured Party may reasonably request, in order to create and/or maintain the validity, perfection or priority of and protect any security interest granted or purported to be granted hereby or to enable the Secured Party to exercise and enforce its rights and remedies hereunder with respect to any Collateral. Without limiting the generality of the foregoing, each Grantor shall: (i) file such financing or continuation statements, or amendments thereto, and execute and deliver such other agreements, instruments, endorsements, powers of attorney or notices, as may be necessary or desirable, or as the Secured Party may reasonably request, in order to perfect and preserve the security interests granted or purported to be granted hereby; (ii) take all actions necessary to ensure the recordation of appropriate evidence of the liens and security interest granted hereunder in the Intellectual Property with any intellectual property registry in which said Intellectual Property is registered or in which an application for registration is pending including, without limitation, the United States Patent and Trademark Office, the United States Copyright Office, the various Secretaries of State, and the foreign counterparts on any of the foregoing; (iii) at any reasonable time, upon request by the Secured Party, exhibit the Collateral to and allow inspection of the Collateral by the Secured Party, or persons designated by the Secured Party; and 27 (iv) at the Secured Party's request, appear in and defend any action or proceeding that may affect such Grantor's title to or the Secured Party's security interest in all or any part of the Collateral. (b) Each Grantor hereby authorizes the Secured Party to file a Record or Records, including, without limitation, financing or continuation statements, and amendments thereto, in any jurisdictions and with any filing offices as the Secured Party may determine, in its sole discretion, are necessary or advisable to perfect the security interest granted to the Secured Party herein. Such financing statements may describe the Collateral in the same manner as described herein or may contain an indication or description of collateral that describes such property in any other manner as the Secured Party may determine, in its sole discretion, is necessary, advisable or prudent to ensure the perfection of the security interest in the Collateral granted to the Secured Party herein, including, without limitation, describing such property as "all assets" or "all personal property, whether now owned or hereafter acquired." Each Grantor shall furnish to the Secured Party from time to time statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as the Secured Party may reasonably request, all in reasonable detail. (c) Each Grantor hereby authorizes the Secured Party to modify this Agreement after obtaining such Grantor's approval of or signature to such modification by amending Schedule 4.7 (as such schedule may be amended or supplemented from time to time) to include reference to any right, title or interest in any existing Intellectual Property or any Intellectual Property acquired or developed by any Grantor after the execution hereof or to delete any reference to any right, title or interest in any Intellectual Property in which any Grantor no longer has or claims any right, title or interest. 5.3 ADDITIONAL GRANTORS. From time to time subsequent to the date hereof, additional Persons may become parties hereto as additional Grantors (each, an "Additional Grantor"), by executing a counterpart agreement in form and substance satisfactory to the Secured Party. Upon delivery of any such counterpart agreement to the Secured Party, notice of which is hereby waived by Grantors, each Additional Grantor shall be a Grantor and shall be as fully a party hereto as if Additional Grantor were an original signatory hereto. Each Grantor expressly agrees that its obligations arising hereunder shall not be affected or diminished by the addition or release of any other Grantor hereunder, nor by any election of Secured Party not to cause any Subsidiary of Company to become an Additional Grantor hereunder. This Agreement shall be fully effective as to any Grantor that is or becomes a party hereto regardless of whether any other Person becomes or fails to become or ceases to be a Grantor hereunder. SECTION 6. SECURED PARTY APPOINTED ATTORNEY-IN-FACT. 6.1 POWER OF ATTORNEY. Each Grantor hereby irrevocably appoints the Secured Party as such Grantor's attorney-in-fact, with full authority in the place and stead of such Grantor and in the name of such Grantor, the Secured Party or otherwise, from time to time in the Secured Party's discretion to take any action and to execute any instrument that the Secured Party may deem reasonably necessary or advisable to accomplish the purposes of this Agreement, including, without limitation, the following: (a) upon the occurrence and during the continuance of any Event of Default, to obtain and adjust insurance required to be maintained by such Grantor or paid to the Secured Party pursuant to the Indenture; (b) upon the occurrence and during the continuance of any Event of Default, to ask for, demand, collect, sue for, recover, compound, receive and give acquittance and receipts for moneys due and to become due under or in respect of any of the Collateral; 28 (c) upon the occurrence and during the continuance of any Event of Default, to receive, endorse and collect any drafts or other instruments, documents and chattel paper in connection with clause (b) above; (d) upon the occurrence and during the continuance of any Event of Default, to file any claims or take any action or institute any proceedings that the Secured Party may deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce the rights of the Secured Party with respect to any of the Collateral; (e) to prepare and file any UCC financing statements against such Grantor as debtor; (f) to prepare, sign, and file for recordation in any intellectual property registry, appropriate evidence of the lien and security interest granted herein in the Intellectual Property in the name of such Grantor as assignor; (g) to take or cause to be taken all actions necessary to perform or comply or cause performance or compliance with the terms of this Agreement, including, without limitation, access to pay or discharge taxes or Liens (other than Permitted Liens) levied or placed upon or threatened against the Collateral, the legality or validity thereof and the amounts necessary to discharge the same to be determined by the Secured Party in its sole discretion, any such payments made by the Secured Party to become obligations of such Grantor to the Secured Party, due and payable immediately without demand; and (h) generally to sell, transfer, pledge, make any agreement with respect to or otherwise deal with any of the Collateral as fully and completely as though the Secured Party were the absolute owner thereof for all purposes, and to do, at the Secured Party's option and such Grantor's expense, at any time or from time to time, all acts and things that the Secured Party deems reasonably necessary or desirable to protect, preserve or realize upon the Collateral and the Secured Party's security interest therein in order to effect the intent of this Agreement, all as fully and effectively as such Grantor might do. 6.2 NO DUTY ON THE PART OF SECURED PARTY. The powers conferred on the Secured Party hereunder are solely to protect the interests of the Secured Parties in the Collateral and shall not impose any duty upon the Secured Party to exercise any such powers. The Secured Party shall be accountable only for amounts that it actually receives as a result of the exercise of such powers, and neither it nor any of its officers, directors, employees or agents shall be responsible to any Grantor for any act or failure to act hereunder, except for its own gross negligence or willful misconduct. 6.3 RATIFICATION. Each Grantor hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof. All powers, authorizations and agencies contained in this Agreement are coupled with an interest and are irrevocable until this Agreement is terminated and the security interest created hereby are released. SECTION 7. REMEDIES. 7.1 GENERALLY. (a) If any Event of Default shall have occurred and be continuing, the Secured Party may exercise in respect of the Collateral, in addition to all other rights and remedies provided for herein or otherwise available to it at law or in equity, all the rights and remedies of a secured party on default under the UCC (whether or not the UCC applies to the affected Collateral) to collect, enforce or satisfy 29 any Secured Obligations then owing, whether by acceleration or otherwise, and also may pursue any of the following separately, successively or simultaneously: (i) require any Grantor to, and each Grantor hereby agrees that it shall at its expense and promptly upon request of the Secured Party forthwith, assemble all or part of the Collateral as directed by the Secured Party and make it available to the Secured Party at a place to be designated by the Secured Party that is reasonably convenient to both parties; (ii) enter onto the property where any Collateral is located and take possession thereof with or without judicial process; (iii) prior to the disposition of the Collateral, store, process, repair or recondition the Collateral or otherwise prepare the Collateral for disposition in any manner to the extent the Secured Party deems appropriate; and (iv) without notice except as specified below or under the UCC, sell, assign, lease, license (on an exclusive or nonexclusive basis) or otherwise dispose of the Collateral or any part thereof in one or more parcels at public or private sale, at any of the Secured Party's offices or elsewhere, for cash, on credit or for future delivery, at such time or times and at such price or prices and upon such other terms as the Secured Party may deem commercially reasonable. (b) The Secured Party may be the purchaser of any or all of the Collateral at any public or private (to the extent any portion of the Collateral being privately sold is of a kind that is customarily sold on a recognized market or the subject of widely distributed standard price quotations) sale in accordance with the UCC and the Secured Party, as trustee for the Holders, shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such sale made in accordance with the UCC, to use and apply any of the Secured Obligations as a credit on account of the purchase price for any Collateral payable by the Secured Party at such sale. Each purchaser at any such sale shall hold the property sold absolutely free from any claim or right on the part of any Grantor, and each Grantor hereby waives (to the extent permitted by applicable law) all rights of redemption, stay and/or appraisal which it now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted. Each Grantor agrees that, to the extent notice of sale shall be required by law, at least ten (10) days notice to such Grantor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. The Secured Party shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. The Secured Party may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. Each Grantor agrees that it would not be commercially unreasonable for the Secured Party to dispose of the Collateral or any portion thereof by using Internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capability of doing so, or that match buyers and sellers of assets. Each Grantor hereby waives any claims against the Secured Party arising by reason of the fact that the price at which any Collateral may have been sold at such a private sale was less than the price which might have been obtained at a public sale, even if the Secured Party accepts the first offer received and does not offer such Collateral to more than one offeree. If the proceeds of any sale or other disposition of the Collateral are insufficient to pay all the Secured Obligations, Grantors shall be liable for the deficiency and the fees of any attorneys employed by the Secured Party to collect such deficiency. Each Grantor further agrees that a breach of any of the covenants contained in this Section will cause irreparable injury to the Secured Party, that the Secured Party has no adequate remedy at law in respect of such breach and, as a consequence, that each and every covenant contained in this Section shall be specifically enforceable against such Grantor, and such Grantor hereby waives and agrees not to assert any defenses against an 30 action for specific performance of such covenants except for a defense that no default has occurred giving rise to the Secured Obligations becoming due and payable prior to their stated maturities. Nothing in this Section shall in any way alter the rights of the Secured Party hereunder. (c) The Secured Party may sell the Collateral without giving any warranties as to the Collateral. The Secured Party may specifically disclaim or modify any warranties of title or the like. This procedure will not be considered to adversely effect the commercial reasonableness of any sale of the Collateral. (d) If the Secured Party sells any of the Collateral on credit, the Secured Obligations will be credited only with payments actually made by the purchaser and received by the Secured Party and applied to the indebtedness of the purchaser. In the event the purchaser fails to pay for the Collateral, the Secured Party may resell the Collateral. (e) The Secured Party shall have no obligation to marshal any of the Collateral. 7.2 APPLICATION OF PROCEEDS. Except as expressly provided elsewhere in this Agreement, all proceeds received by the Secured Party in respect of any sale, any collection from, or other realization upon all or any part of the Collateral shall be applied in full or in part by the Secured Party against, the Secured Obligations in the order of priority set forth in Section 506 of the Indenture. 7.3 SALES ON CREDIT. If Secured Party sells any of the Collateral upon credit, Grantor will be credited only with payments actually made by purchaser and received by Secured Party and applied to indebtedness of the purchaser. In the event the purchaser fails to pay for the Collateral, Secured Party may resell the Collateral and Grantor shall be credited with proceeds of the sale. 7.4 DEPOSIT ACCOUNTS. If any Event of Default shall have occurred and be continuing, the Secured Party may apply the balance from any Deposit Account or instruct the bank at which any Deposit Account is maintained to pay the balance of any Deposit Account to or for the benefit of the Secured Party. 7.5 INVESTMENT RELATED PROPERTY. (a) Each Grantor recognizes that, by reason of certain prohibitions contained in the Securities Act and applicable state securities laws, the Secured Party may be compelled, with respect to any sale of all or any part of the Investment Related Property conducted without prior registration or qualification of such Investment Related Property under the Securities Act and/or such state securities laws, to limit purchasers to those who will agree, among other things, to acquire the Investment Related Property for their own account, for investment and not with a view to the distribution or resale thereof. Each Grantor acknowledges that any such private sale may be at prices and on terms less favorable than those obtainable through a public sale without such restrictions (including a public offering made pursuant to a registration statement under the Securities Act) and, notwithstanding such circumstances, each Grantor agrees that any such private sale shall be deemed to have been made in a commercially reasonable manner and that the Secured Party shall have no obligation to engage in public sales and no obligation to delay the sale of any Investment Related Property for the period of time necessary to permit the issuer thereof to register it for a form of public sale requiring registration under the Securities Act or under applicable state securities laws, even if such issuer would, or should, agree to so register it. If the Secured Party determines to exercise its right to sell any or all of the Investment Related Property, upon written request, each Grantor shall and shall cause each issuer of any Pledged Stock to be sold hereunder, each partnership and each limited liability company from time to time to furnish to the Secured Party all such information as the Secured Party may request in order to determine the number and nature of interest, shares or other instruments included in the Investment Related Property which may be sold by 31 the Secured Party in exempt transactions under the Securities Act and the rules and regulations of the Securities and Exchange Commission thereunder, as the same are from time to time in effect. (b) Upon the occurrence and during the continuation of an Event of Default, the Secured Party shall have the right to apply the balance from any Deposit Account or instruct the bank at which any Deposit Account is maintained to pay the balance of any Deposit Account to or for the benefit of the Secured Party. 7.6 INTELLECTUAL PROPERTY. (a) Anything contained herein to the contrary notwithstanding, upon the occurrence and during the continuation of an Event of Default: (i) the Secured Party shall have the right (but not the obligation) to bring suit or otherwise commence any action or proceeding in the name of any Grantor, the Secured Party or otherwise, in the Secured Party's sole discretion, to enforce any Intellectual Property, in which event such Grantor shall, at the request of the Secured Party, do any and all lawful acts and execute any and all documents required by the Secured Party in aid of such enforcement and such Grantor shall promptly, upon demand, reimburse and indemnify the Secured Party as provided in Section 10 hereof in connection with the exercise of its rights under this Section, and, to the extent that the Secured Party shall elect not to bring suit to enforce any Intellectual Property as provided in this Section, each Grantor agrees to use all reasonable measures, whether by action, suit, proceeding or otherwise, to prevent the infringement of any of the Intellectual Property by others and for that purpose agrees to diligently maintain any action, suit or proceeding against any Person so infringing as shall be necessary to prevent such infringement; (ii) upon written demand from the Secured Party, each Grantor shall grant, assign, convey or otherwise transfer to the Secured Party all of such Grantor's right, title and interest in and to the Intellectual Property and shall execute and deliver to the Secured Party such documents as are necessary or appropriate to carry out the intent and purposes of this Agreement; (iii) each Grantor agrees that such an assignment and/or recording shall be applied to reduce the Secured Obligations outstanding only to the extent that the Secured Party receives cash proceeds in respect of the sale of, or other realization upon, the Intellectual Property; (iv) within five (5) Business Days after written notice from the Secured Party, each Grantor shall make available to the Secured Party, to the extent within such Grantor's power and authority, such personnel in such Grantor's employ on the date of such Event of Default as the Secured Party may reasonably designate, by name, title or job responsibility, to permit such Grantor to continue, directly or indirectly, to produce, advertise and sell the products and services sold or delivered by such Grantor under or in connection with the Trademarks, Trademark Licenses, such persons to be available to perform their prior functions on the Secured Party's behalf and to be compensated by the Secured Party at such Grantor's expense on a per diem, pro-rata basis consistent with the salary and benefit structure applicable to each as of the date of such Event of Default; and (v) the Secured Party shall have the right to notify, or require each Grantor to notify, any obligors with respect to amounts due or to become due to such Grantor in respect of the Intellectual Property, of the existence of the security interest created herein, to direct such obligors to make payment of all such amounts directly to the Secured Party, and, upon such 32 notification and at the expense of such Grantor, to enforce collection of any such amounts and to adjust, settle or compromise the amount or payment thereof, in the same manner and to the same extent as such Grantor might have done; (1) all amounts and proceeds (including checks and other instruments) received by Grantor in respect of amounts due to such Grantor in respect of the Collateral or any portion thereof shall be received in trust for the benefit of the Secured Party hereunder, shall be segregated from other funds of such Grantor and shall be forthwith paid over or delivered to the Secured Party in the same form as so received (with any necessary endorsement) to be held as cash Collateral and applied as provided by Section 7.7 hereof; and (2) Grantor shall not adjust, settle or compromise the amount or payment of any such amount or release wholly or partly any obligor with respect thereto or allow any credit or discount thereon. (b) If (i) an Event of Default shall have occurred and, by reason of cure, waiver, modification, amendment or otherwise, no longer be continuing, (ii) no other Event of Default shall have occurred and be continuing, (iii) an assignment or other transfer to the Secured Party of any rights, title and interests in and to the Intellectual Property shall have been previously made and shall have become absolute and effective, and (iv) the Secured Obligations shall not have become immediately due and payable, upon the written request of any Grantor, the Secured Party shall promptly execute and deliver to such Grantor, at such Grantor's sole cost and expense, such assignments or other transfer as may be necessary to reassign to such Grantor any such rights, title and interests as may have been assigned to the Secured Party as aforesaid, subject to any disposition thereof that may have been made by the Secured Party; provided, after giving effect to such reassignment, the Secured Party's security interest granted pursuant hereto, as well as all other rights and remedies of the Secured Party granted hereunder, shall continue to be in full force and effect; and provided further, the rights, title and interests so reassigned shall be free and clear of any Liens granted by or on behalf of the Secured Party and the Secured Parties. (c) Solely for the purpose of enabling the Secured Party to exercise rights and remedies under this Section 7 and at such time as the Secured Party shall be lawfully entitled to exercise such rights and remedies, each Grantor hereby grants to the Secured Party, to the extent it has the right to do so, an irrevocable, nonexclusive license (exercisable without payment of royalty or other compensation to such Grantor), subject, in the case of Trademarks, to sufficient rights to quality control and inspection in favor of such Grantor to avoid the risk of invalidation of said Trademarks, to use, operate under, license, or sublicense any Intellectual Property now owned or hereafter acquired by such Grantor, and wherever the same may be located. 7.7 COLLATERAL PROCEEDS. (a) In addition to the rights of the Secured Party specified in Section 4.3 with respect to payments of Receivables, subject to and as permitted by the terms of the Indenture, the Grantors and any Subsidiary (as defined in the Indenture), as the case may be, shall, to the extent provided by Section 1404 of the Indenture, cause Net Cash Proceeds of any Asset Sale pursuant to Section 1017 of the Indenture that involves the sale of Collateral or any Event of Loss (as defined in the Indenture) pursuant to Section 1018 of the Indenture that involves a loss of Collateral to be deposited in the Collateral Account on the Business Day on which such Net Cash Proceeds are received by the Grantor or such Subsidiary. Subject to and as permitted by the terms of the Indenture and the terms of any release or subordination contemplated by Section 1405 of the Indenture, Collateral Proceeds (as defined in the Indenture) (including any earnings thereon) may be released from the Collateral Account at the times and upon the conditions set forth in Section 1404 of the Indenture. 33 (b) The Secured Party will upon the written instructions of ACE from time to time, subject to the provisions of Section 7.7(c) below and the provisions hereof, including without limitation, Sections 7.5(a) and 7.7(c), instruct the financial institution at which the Collateral Account is maintained to (i) invest amounts on deposit in the Collateral Account in such cash equivalents in the name of the Trustee as ACE may select and (ii) invest interest paid on such cash equivalents referred to in clause (i) above, and reinvest other proceeds of any such cash equivalents that may mature or be sold in each case in such cash equivalents in the name of the Trustee, as to which all actions required by Section 4.4(b) shall have been taken as ACE may select (the cash equivalents referred to in clauses (i) and (ii) above, being, collectively, the "COLLATERAL INVESTMENTS"). (c) Interest and proceeds that are not invested or reinvested in Collateral Investments as provided in Section 7.7(b) shall be deposited and held in the Collateral Account. 7.8 TAX REFUNDS The Grantors shall take all actions, as of and following the Issue Date, that the Secured Party may deem necessary or desirable to arrange for all of Grantors' tax refunds (including but not limited to any abatements or refunds of real estate taxes paid for prior periods as a result of successful prosecution or settlement of an appeals procedure or otherwise) to be delivered directly to the Secured Party for the benefit of the Holders, including, without limitation, executing and delivering any and all documents, instruments, and agreements required under the Tax Code or applicable state or local law therefor, and shall not take any action to adversely impact the Secured Party's security interest in such tax refunds or for the distribution of the tax refunds directly to the Secured Party for the benefit of the Holders. SECTION 8. SECURED PARTY. The Secured Party acts as the trustee on behalf of the Holders as set forth in the Indenture. The Secured Party shall be obligated, and shall have the right hereunder, to make demands, to give notices, to exercise or refrain from exercising any rights, and to take or refrain from taking any action (including, without limitation, the release or substitution of Collateral), solely in accordance with this Agreement and the Indenture. In furtherance of the foregoing provisions of this Section, each Holder, by its acceptance of the benefits hereof, agrees that it shall have no right individually to realize upon any of the Collateral hereunder, it being understood and agreed by such Holder that all rights and remedies hereunder may be exercised solely by the Secured Party for the benefit of the Holders in accordance with the terms of this Section. The Secured Party may resign as trustee or be removed and a successor trustee may be appointed, all in accordance with Sections 608, 609, and 610 of the Indenture. SECTION 9. CONTINUING SECURITY INTEREST; TRANSFER OF NOTES. This Agreement shall create a continuing security interest in the Collateral and shall remain in full force and effect until the payment in full of all Secured Obligations, be binding upon each Grantor, its successors and assigns, and inure, together with the rights and remedies of the Secured Party hereunder, to the benefit of the Secured Party and its successors, transferees and assigns, for the benefit and on behalf of the Holders. Without limiting the generality of the foregoing, any Secured Party may assign or otherwise transfer any Secured Obligations held by it to any other Person subject to and in compliance with the terms of the Indenture, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to the Secured Party herein or otherwise. Upon the payment in full of all Secured Obligations, the security interest granted hereby shall terminate hereunder and of record and all rights to the Collateral shall revert to Grantors. Upon any such termination the Secured Party shall, at Grantors' expense, execute and deliver to Grantors such documents as Grantors shall reasonably request to evidence such termination. 34 SECTION 10. STANDARD OF CARE; SECURED PARTY MAY PERFORM. (a) The powers conferred on the Secured Party hereunder are solely to protect its interest, for the benefit and on behalf of the Holders, in the Collateral and shall not impose any duty upon it to exercise any such powers. Except for the exercise of reasonable care in the custody of any Collateral in its possession, duties imposed under the Trust Indenture Act of 1939, and the accounting for moneys actually received by it hereunder, the Secured Party shall have no duty as to any Collateral or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral. The Secured Party shall be deemed to have exercised reasonable care in the custody and preservation of Collateral in its possession if such Collateral is accorded treatment substantially equal to that which the Secured Party accords its own property. Neither the Secured Party nor any of its directors, officers, employees or agents shall be liable for failure to demand, collect or realize upon all or any part of the Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of any Grantor or otherwise. If any Grantor fails to perform any agreement contained herein, the Secured Party may itself perform, or cause performance of, such agreement, and the expenses of the Secured Party incurred in connection therewith shall be payable by each Grantor under Section 1408 of the Indenture. SECTION 11. MISCELLANEOUS. Any notice required or permitted to be given under this Agreement shall be given in accordance with Section 105 of the Indenture. No failure or delay on the part of the Secured Party in the exercise of any power, right or privilege hereunder or under the Indenture, the Notes or the Security Documents shall impair such power, right or privilege or be construed to be a waiver of any default or acquiescence therein, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other power, right or privilege. The terms and provisions of this Agreement are in addition to and not in limitation of the provisions contained in the Notes, the Indenture, and the other Security Documents (as defined in the Indenture). All rights and remedies existing under this Agreement and the Notes, the Indenture, and the other Security Documents (as defined in the Indenture) are cumulative to, and not exclusive of, any rights or remedies otherwise available. In case any provision in or obligation under this Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby. All covenants hereunder shall be given independent effect so that if a particular action or condition is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or would otherwise be within the limitations of, another covenant shall not avoid the occurrence of a Default or an Event of Default (as each term is defined in the Indenture) if such action is taken or condition exists. This Agreement shall be binding upon and inure to the benefit of the Secured Party and Grantors and their respective successors and assigns. No Grantor shall, without the prior written consent of the Secured Party given in accordance with the Indenture, assign any right, duty or obligation hereunder. This Agreement and the Notes, the Indenture, and the other Security Documents (as defined in the Indenture) embody the entire agreement and understanding between Grantors and the Secured Party and supersede all prior agreements and understandings between such parties relating to the subject matter hereof and thereof. Accordingly, this Agreement, the Notes, the Indenture, and the other Security Documents (as defined in the Indenture) may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements of the parties. There are no unwritten oral agreements between the parties. This Agreement may be executed in one or more counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument; signature pages may be detached 35 from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ITS CONFLICTS OF LAW PROVISIONS (OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATION LAW). SECTION 12. CASINO CONTROL ACT Notwithstanding the provisions of Section 11 hereof, each of the provisions of this Agreement is subject to and shall be enforced in compliance with the provisions of the Casino Control Act, to the extent applicable, and the regulations promulgated thereunder, unless such provisions are in conflict with the Trust Indenture Act of 1939, as amended from time to time ("TIA"), in which case the TIA shall control. SECTION 13. REIMBURSEMENT OF LEGAL FEES In addition to the Grantors' obligations to compensate and reimburse the Trustee as set forth in Section 606 of the Indenture, the Grantors agree to reimburse the Requisite Lenders (as defined in the Indenture) for all legal fees and expenses incurred by Brown Rudnick Berlack Israels LLP and Wolff & Samson PC in connection with the preparation, negotiation, execution, and delivery of this Agreement and the Security Documents. 36 IN WITNESS WHEREOF, each Grantor and the Secured Party have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first written above. GRANTORS: ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC. By: ----------------------------- Name: Title: Address: Sands Hotel & Casino, Indiana Avenue and Brighton Park, Atlantic City, NJ 08401 ACE GAMING, LLC By: ----------------------------- Name: Title: Address: Sands Hotel & Casino, Indiana Avenue and Brighton Park, Atlantic City, NJ 08401 SECURED PARTY: WELL FARGO BANK, NATIONAL ASSOCIATION, as Trustee By: ----------------------------- Name: Title: Address: Sixth and Marquette MAC N9303-120, Minneapolis, MN 55479 37 SCHEDULE 4.1 TO PLEDGE AND SECURITY AGREEMENT GENERAL INFORMATION (A) Full Legal Name, Type of Organization, Jurisdiction of Organization, Chief Executive Office/Sole Place of Business (or Residence if Grantor is a Natural Person) and Organizational Identification Number of each Grantor:
Chief Executive Office/Sole Place of Business (or Type of Jurisdiction of Residence if Grantor Full Legal Name Organization Organization is a Natural Person) Organization I.D.# - --------------- ------------ ------------ -------------------- ------------------ ACE Gaming, LLC Limited New Jersey Sands Hotel & Casino 54-2131351 Liability Indiana Avenue & Company Brighton Park, Atlantic City, NJ 08401 Atlantic Coast Corporation Delaware Sands Hotel & Casino 54-2131349 Holdings Indiana Avenue & Entertainment, Inc. Brighton Park, Atlantic City, NJ 08401
(B) Other Names (including any Trade-Name or Fictitious Business Name) under which each Grantor has conducted business for the past five (5) years: SANDS HOTEL & CASINO. (C) Changes in Name, Jurisdiction of Organization, Chief Executive Office or Sole Place of Business (or Principal Residence if Grantor is a Natural Person) and Corporate Structure within past five (5) years: NONE (D) Agreements pursuant to which any Grantor is found as debtor within past five (5) years: NONE SCHEDULE 4.1-1 (E) Financing Statements: Name of Grantor Filing Jurisdiction(s) - --------------- ---------------------- ACE Gaming, LLC. (UCC-1) New Jersey Atlantic Coast Entertainment (UCC-1) Delaware Holdings, Inc. SCHEDULE 4.1-2 SCHEDULE 4.2 TO PLEDGE AND SECURITY AGREEMENT Name of Grantor Location of Equipment and Inventory - --------------- ----------------------------------- ACE Gaming, LLC Sands Hotel & Casino - Indiana Avenue and Brighton Park, Atlantic City, NJ 08401 Warehouse Location: Radio Road Mystic Island Little Egg Harbor Township, NJ 08087 Atlantic Coast Entertainment Holdings, Inc. Sands Hotel & Casino - Indiana Avenue and Brighton Park, Atlantic City, NJ 08401 Warehouse Location: Radio Road Mystic Island Little Egg Harbor Township, NJ 08087 SCHEDULE 4.2-1 SCHEDULE 4.4 TO PLEDGE AND SECURITY AGREEMENT INVESTMENT RELATED PROPERTY (A)(1) Pledged Stock: NONE
=============== ========== ============ ================ =============== ========== ============ ================= % OF STOCK NO. OF OUTSTANDING STOCK CLASS OF CERTIFICATED CERTIFICATE PLEDGED STOCK OF THE GRANTOR ISSUER STOCK (Y/N) NO. PAR VALUE STOCK STOCK ISSUER =============== ========== ============ ================ =============== ========== ============ ================= =============== ========== ============ ================ =============== ========== ============ =================
(2) Pledged LLC Interests:
===================== =================== ==================== ================== ================== ================== % OF OUTSTANDING LLC INTERESTS OF LIMITED LIABILITY CERTIFICATE NO. NO. OF PLEDGED THE LIMITED GRANTOR COMPANY CERTIFICATED (Y/N) (IF ANY) UNITS LIABILITY COMPANY ===================== =================== ==================== ================== ================== ================== Atlantic Coast Ace Gaming, LLC N - - 100% Entertainment Holdings, Inc. ===================== =================== ==================== ================== ================== ==================
(3) Pledged Partnership Interests: NONE
==================== ================== =================== =================== ====================== ===================== TYPE OF PARTNERSHIP % OF OUTSTANDING INTERESTS (E.G., PARTNERSHIP GENERAL OR CERTIFICATE NO. INTERESTS OF THE GRANTOR PARTNERSHIP LIMITED) CERTIFICATED (Y/N) (IF ANY) PARTNERSHIP ==================== ================== =================== =================== ====================== ===================== ==================== ================== =================== =================== ====================== =====================
(4) Pledged Trust Interests: NONE
===================== ================== ============== =================== ===================== ========================== CLASS OF TRUST CERTIFICATE NO. % OF OUTSTANDING TRUST GRANTOR TRUST INTERESTS CERTIFICATED (Y/N) (IF ANY) INTERESTS OF THE TRUST ===================== ================== ============== =================== ===================== ========================== ===================== ================== ============== =================== ===================== ==========================
SCHEDULE 4.4-1 (5) Pledged Debt: NONE
===================== ================== ======================== ===================== ================= ================== ORIGINAL PRINCIPAL OUTSTANDING GRANTOR ISSUER AMOUNT PRINCIPAL BALANCE ISSUE DATE MATURITY DATE - --------------------- ------------------ ------------------------ --------------------- ----------------- ------------------ ===================== ================== ======================== ===================== ================= ==================
(6) Securities Account: NONE
========================== ======================= ===================================== =================================== SHARE OF SECURITIES GRANTOR/ACCOUNT NAME INTERMEDIARY ACCOUNT NUMBER DESCRIPTION - -------------------------- ----------------------- ------------------------------------- ----------------------------------- ========================== ======================= ===================================== ===================================
(7) Commodities Accounts: NONE
========================== ======================= ===================================== =================================== NAME OF COMMODITIES GRANTOR/ACCOUNT NAME INTERMEDIARY ACCOUNT NUMBER DESCRIPTION - -------------------------- ----------------------- ------------------------------------- ----------------------------------- ========================== ======================= ===================================== ===================================
(8) (a) Deposit Accounts: Concentration Account
========================== ======================= ===================================== =================================== NAME OF DEPOSITARY GRANTOR/ACCOUNT NAME BANK ACCOUNT NUMBER DESCRIPTION - -------------------------- ----------------------- ------------------------------------- ----------------------------------- ACE Gaming, LLC Fleet Bank NA 9429372318 Sands Hotel Concentration Account New Jersey ========================== ======================= ===================================== ===================================
(b) Deposit Accounts: Collection Account
========================== ======================= ===================================== =================================== NAME OF DEPOSITARY GRANTOR/ACCOUNT NAME BANK ACCOUNT NUMBER ACCOUNT NAME/DESCRIPTION - -------------------------- ----------------------- ------------------------------------- ----------------------------------- ACE Gaming, LLC Fleet Bank NA 9429372334 ACE-Hotel Depository Account New Jersey ACE-Casino Depository A/C Fleet Bank NA 9429372326 New Jersey SCHEDULE 4.4-2 - -------------------------- ----------------------- ------------------------------------- ----------------------------------- ACE-Credit Card Activity ACE Gaming, LLC Fleet 9429372342 ACE-Casino Returns Fleet 9429372350 ACE-Hotel Returns Fleet 9429372369 ========================== ======================= ===================================== ===================================
(c) Deposit Accounts: Collateral Account
========================== ======================= ===================================== =================================== NAME OF DEPOSITARY GRANTOR/ACCOUNT NAME BANK ACCOUNT NUMBER DESCRIPTION - -------------------------- ----------------------- ------------------------------------- ----------------------------------- ACE Gaming, LLC Commerce Bank 7858014223 Cash Collateral Account - Wells Fargo ========================== ======================= ===================================== ===================================
SCHEDULE 4.4-3 (d) Deposit Accounts: ZBA Accounts
========================== ======================= ===================================== =================================== NAME OF DEPOSITARY GRANTOR/ACCOUNT NAME BANK ACCOUNT NUMBER DESCRIPTION - -------------------------- ----------------------- ------------------------------------- ----------------------------------- ACE Gaming, LLC Fleet Maine N.A. 0080237373 ACE-Accounts Payable Fleet Maine N.A. 0080237381 ACE-Case Account Fleet Bank N.A., 9429372393 ACE-Retirement Account New Jersey Fleet Bank N.A., 9429372385 ACE-Tax Account New Jersey Fleet Bank N.A., 9429372406 ACE-Postage Account New Jersey Fleet Bank N.A., 9429372377 ACE-Lottery New Jersey ========================== ======================= ===================================== ===================================
(e) Deposit Accounts: Others
========================== ======================= ===================================== =================================== NAME OF DEPOSITARY GRANTOR/ACCOUNT NAME BANK ACCOUNT NUMBER DESCRIPTION - -------------------------- ----------------------- ------------------------------------- ----------------------------------- ACE Gaming, LLC Commerce Bank 7857989557 ACE-Payroll Account Commerce Bank 7857989540 ACE-Customer Claims Commerce Bank 7857989532 ACE-Customer Reimbursement ACE-Legal Department Commerce Bank 7857989565 Atlantic Coast Fleet 9429354435 Entertainment Holdings, Inc. ========================== ======================= ===================================== ===================================
SCHEDULE 4.4-4 (B) Name of Grantor Date of Acquisition Description of Acquisition ACE Gaming, LLC July 22, 2004 Tier 2 Assets as defined in that certain Contribution Agreement , by and among GB Holdings, Inc. and Greate Bay Hotel and Casino, Inc. as Transferors (defined therein) and ACE and the Company as Transferees (defined therein) Atlantic Coast July 22, 2004 Tier 1 Assets as defined in that Entertainment certain Contribution Agreement , Holdings, Inc. by and among GB Holdings, Inc. and Greate Bay Hotel and Casino, Inc. as Transferors (defined therein) and ACE and the Company as Transferees (defined therein) SCHEDULE 4.4-5 SCHEDULE 4.5 TO PLEDGE AND SECURITY AGREEMENT Name of Grantor Description of Material Contract - --------------- -------------------------------- Ace Gaming, LLC NONE Atlantic Coast Entertainment Holdings, Inc. NONE SCHEDULE 4.5-1 SCHEDULE 4.6 TO PLEDGE AND SECURITY AGREEMENT Name of Grantor Description of Letters of Credit - --------------- -------------------------------- Ace Gaming, LLC NONE Atlantic Coast Entertainment Holdings, Inc. NONE SCHEDULE 4.6-1 SCHEDULE 4.7 TO PLEDGE AND SECURITY AGREEMENT INTELLECTUAL PROPERTY (A) Copyrights - NONE (B) Copyright Licenses - NONE (C) Patents - NONE (D) Patent Licenses - NONE (E) Trademarks FEDERAL TRADEMARKS Ace Gaming, LLC:
- --------- --------------- --------------------- ------------------ ---------------------------------------- SERIAL NUMBER REG. NUMBER WORD MARK NOTE: - --------- --------------- --------------------- ------------------ ---------------------------------------- 1 78229774 SANDS Pre-existing duty to assign trademark application to Las Vegas Sands, Inc. upon request of Las Vegas Sands, Inc. per License Agreement dated on or around the date hereof (described below in (F)). - --------- --------------- --------------------- ------------------ ---------------------------------------- 2 78216312 2856962 FASTPAY - --------- --------------- --------------------- ------------------ ----------------------------------------
Atlantic Coast Holdings Entertainment, Inc.: NONE. NEW JERSEY STATE TRADEMARKS Ace Gaming, LLC: - ------------------------- ---------------------- WORD MARK SERIAL NOS. - ------------------------- ---------------------- THE PLAZA CLUB 00065830 00065831 00065832 - ------------------------- ---------------------- THE FOOD COURT 00460812 00460813 00460814 - ------------------------- ---------------------- SCHEDULE 4.7-1 Atlantic Coast Holdings Entertainment, Inc.: NONE. COMMON LAW TRADEMARKS: ACE Gaming, LLC: WORD MARK Swingers Atlantic Coast Holdings Entertainment, Inc.: NONE. (F) Trademark Licenses ACE Gaming, LLC (by Assignment, on or around the date hereof, from Graete Bay Hotel and Casino, Inc. to ACE Gaming, LLC): License Agreement, dated on or around the date hereof, between Las Vegas Sands, Inc. and Greate Bay Hotel and Casino, Inc. wherein Las Vegas Sands, Inc. grants an exclusive license to use the SANDS mark as shown in US Trademark Registration No. 1,209,102 and is the subject of a new application to register the mark "SANDS" [stylized] No. 78, 299, 774. Atlantic Coast Holdings Entertainment, Inc.: NONE. (G) Trade Secret Licenses - NONE (H) Intellectual Property Matters - NONE SCHEDULE 4.7-2 SCHEDULE 4.8 TO PLEDGE AND SECURITY AGREEMENT Name of Grantor Commercial Tort Claims --------------- ---------------------- Ace Gaming, LLC NONE. Atlantic Coast Entertainment Holdings, Inc. NONE. SCHEDULE 4.8-1 EXHIBIT A TO PLEDGE AND SECURITY AGREEMENT PLEDGE SUPPLEMENT This PLEDGE SUPPLEMENT, dated [MM/DD/YY], is delivered pursuant to the Pledge and Security Agreement, dated as of [MM/DD/YY] (as it may be from time to time amended, restated, modified or supplemented, the "SECURITY AGREEMENT"), among [NAME OF COMPANY], the other Grantors named therein, and [NAME OF TRUSTEE], as the Secured Party. Capitalized terms used herein not otherwise defined herein shall have the meanings ascribed thereto in the Security Agreement. Grantor hereby confirms the grant to the Secured Party set forth in the Security Agreement of, and does hereby grant to the Secured Party, a security interest in all of Grantor's right, title and interest in and to all Collateral to secure the Secured Obligations, in each case whether now or hereafter existing or in which Grantor now has or hereafter acquires an interest and wherever the same may be located. Grantor represents and warrants that the attached Supplements to Schedules accurately and completely set forth all additional information required pursuant to the Security Agreement and hereby agrees that such Supplements to Schedules shall constitute part of the Schedules to the Security Agreement. IN WITNESS WHEREOF, Grantor has caused this Pledge Supplement to be duly executed and delivered by its duly authorized officer as of [MM/DD/YY]. [NAME OF GRANTOR] By:_____________________________ Name: Title: EXHIBIT A-1 SUPPLEMENT TO SCHEDULE 4.1 TO PLEDGE AND SECURITY AGREEMENT Additional Information: (A) Full Legal Name, Type of Organization, Jurisdiction of Organization, Chief Executive Office/Sole Place of Business (or Residence if Grantor is a Natural Person) and Organizational Identification Number of each Grantor:
Chief Executive Office/Sole Place of Business (or Jurisdiction of Residence if Grantor Full Legal Name Type of Organization Organization is a Natural Person) Organization I.D.# - --------------- -------------------- ------------ -------------------- ------------------
(B) Other Names (including any Trade-Name or Fictitious Business Name) under which each Grantor has conducted business for the past five (5) years: Name of Grantor Description of Agreement - --------------- ------------------------ (C) Changes in Name, Jurisdiction of Organization, Chief Executive Office or Sole Place of Business (or Principal Residence if Grantor is a Natural Person) and Corporate Structure within past five (5) years: Full Legal Name Trade Name or Fictitious Business Name - --------------- -------------------------------------- (D) Agreements pursuant to which any Grantor is found as debtor within past five (5) years: Name of Grantor Date of Change Description of Change - --------------- -------------- --------------------- EXHIBIT 1.1 (E) Financing Statements: Name of Grantor Filing Jurisdiction(s) - --------------- ---------------------- EXHIBIT 1.2 SUPPLEMENT TO SCHEDULE 4.2 TO PLEDGE AND SECURITY AGREEMENT Additional Information: Name of Grantor Location of Equipment and Inventory - --------------- ----------------------------------- EXHIBIT 1.3 SUPPLEMENT TO SCHEDULE 4.4 TO PLEDGE AND SECURITY AGREEMENT Additional Information: (A) Pledged Stock: Pledged Partnership Interests: Pledged LLC Interests: Pledged Trust Interests: Pledged Debt: Securities Account: Commodities Accounts: Deposit Accounts: (B) Name of Grantor Date of Acquisition Description of Acquisition - --------------- ------------------- -------------------------- EXHIBIT 1.4 SUPPLEMENT TO SCHEDULE 4.5 TO PLEDGE AND SECURITY AGREEMENT Additional Information: Name of Grantor Description of Material Contract - --------------- -------------------------------- EXHIBIT 1.5 SUPPLEMENT TO SCHEDULE 4.6 TO PLEDGE AND SECURITY AGREEMENT Additional Information: Name of Grantor Description of Letters of Credit - --------------- -------------------------------- EXHIBIT 1.6 SUPPLEMENT TO SCHEDULE 4.7 TO PLEDGE AND SECURITY AGREEMENT Additional Information: (A) Copyrights (B) Copyright Licenses (C) Patents (D) Patent Licenses (E) Trademarks (F) Trademark Licenses (G) Trade Secret Licenses (H) Intellectual Property Matters EXHIBIT 1.7 SUPPLEMENT TO SCHEDULE 4.8 TO PLEDGE AND SECURITY AGREEMENT Additional Information: Name of Grantor Commercial Tort Claims - --------------- ---------------------- EXHIBIT 1.8 EXHIBIT B TO PLEDGE AND SECURITY AGREEMENT FORM OF ACCOUNT CONTROL AGREEMENT This Account Control Agreement dated as of __________, 200[ ] among ________________ (the "Debtor"), WELLS FARGO BANK, NATIONAL ASSOCIATION, as trustee (the "Trustee") for the Holders under an Indenture dated as of July 22, 2004 among Atlantic Coast Entertainment Holdings, Inc., a Delaware corporation (the "Company"), as issuer, the Secured Party, as trustee, and ACE Gaming, LLC, a New Jersey limited liability company, as a ("ACE"), as guarantor (the "Indenture"), and ____________ in its capacity as a "securities intermediary" (as defined in Section 8-102 of the UCC and a "bank" as defined in Section 9-102 of the UCC (in such capacities, the "Financial Institution"). Capitalized terms used but not defined herein shall have the meaning assigned in the Pledge and Security Agreement dated as of July 22, 2004 between the Debtor, the other grantors therein and the Trustee (the "Security Agreement"). All references herein to the "UCC" shall mean the Uniform Commercial Code as in effect in the State of New York. 1. ESTABLISHMENT OF COLLATERAL ACCOUNTS. The Financial Institution hereby confirms and agrees that: (a) The Financial Institution has established the following accounts: (i) the "[IDENTIFY EXACT TITLE OF ACCOUNT]" with account number [IDENTIFY ACCOUNT NUMBER] in the name "[IDENTIFY EXACT TITLE OF ACCOUNT]" in the name of "[identify name of account holder]" (the "_____ Account"); (ii) the "[identify exact title of account]" with account number [identify account number] in the name "[identify exact title of account]" in the name of "[identify name of account holder]" (the "_____ Account"); and (iii) the "[IDENTIFY EXACT TITLE OF ACCOUNT]" with account number [IDENTIFY ACCOUNT NUMBER] in the name "[IDENTIFY EXACT TITLE OF ACCOUNT]" in the name of "[identify name of account holder]" (the "_____ Account"). Each such account and any successor account, being referred to herein individually as a "Pledged Account" and collectively as the "Pledged Accounts." The Financial Institution shall not change the name or account number of any Pledged Account without the prior written consent of the Secured Party1; (b) Each of the Pledged Accounts are either a "securities account" (as defined in Section 8-501 of the UCC) or a "deposit account" as defined in Section 9-102(a)(29) of the UCC). The Financial Intermediary acknowledges and agrees that the ____ Account[s] are intended to be deposit accounts and the _________ Account[s] are intended to be securities accounts. Notwithstanding such intention, as used herein "Deposit Account" shall mean any Pledged Account which is determined to be a "deposit account" (within the meaning of Section 9-102(a)(29) of the UCC and "Securities Account" shall mean any Pledged Account which is determined to be a "securities account" (within the meaning of Section 8-501 of the UCC . (c) All securities or other property underlying any financial assets credited to any Securities Account shall be registered in the name of the Financial Institution, indorsed to the Financial Institution or in blank or credited to another securities account maintained in the name of the Financial Institution and in no case will any financial asset credited to any Securities Account be registered in the name of the Debtor, payable to the order of the Debtor or specially indorsed to the Debtor except to the extent the foregoing have been specially indorsed to the Financial Institution or in blank; (d) All property delivered to the Financial Institution pursuant to the Security Agreement will be promptly credited to one of the Pledged Accounts. 2. "FINANCIAL ASSETS" ELECTION. The Financial Institution hereby agrees that each item of property (whether investment property, financial asset, security, instrument or cash) credited to any Pledged Account that is a Securities Account shall be treated as a "financial asset" within the meaning of Section 8-102(a)(9) of the UCC. 3. CONTROL OF THE PLEDGED ACCOUNTS. If at any time the Financial Institution shall receive any order from the Trustee directing transfer or redemption of any financial asset relating to a Pledged Account or any instruction originated by the Trustee directing the disposition of funds in a Pledged Account, the Financial Institution shall comply with such entitlement order or instruction without further consent by the Debtor or any other person. 4. SUBORDINATION OF LIEN; WAIVER OF SET-OFF. In the event that the Financial Institution has or subsequently obtains by agreement, by operation of law or otherwise a security interest in any Pledged Account or any security entitlement or cash credited thereto, the Financial Institution hereby agrees that such security interest shall be subordinate to the security interest of the Trustee. The financial assets, money and other items credited to any Pledged Account will not be subject to deduction, set-off, banker's lien, or any other right in favor of any person other than the Secured Party (except that the Financial Institution may set off (i) all amounts due to the Financial Institution in respect of customary fees and expenses for the routine maintenance and operation of the respective Pledged Account and (ii) the face amount of any checks which have been credited to such Pledged Account but are subsequently returned unpaid because of uncollected or insufficient funds). 5. CHOICE OF LAW. This Agreement shall each be governed by the laws of the State of New York. Regardless of any provision in any other agreement, for purposes of the UCC, New York shall be deemed to be the Financial Institution's jurisdiction (within the meaning of Section 9-304 of the UCC and Section 8-110 of the UCC). The Pledged Accounts shall be governed by the laws of the State of New York. 6. CONFLICT WITH OTHER AGREEMENTS. (a) In the event of any conflict between this Agreement (or any portion thereof) and any other agreement now existing or hereafter entered into, the terms of this Agreement shall prevail; (b) No amendment or modification of this Agreement or waiver of any right hereunder shall be binding on any party hereto unless it is in writing and is signed by all of the parties hereto; (c) The Financial Institution hereby confirms and agrees that: (i) There are no other agreements entered into between the Financial Institution and the Debtor with respect to any Pledged Account [EXCEPT FOR [IDENTIFY OTHER AGREEMENTS] (THE "ACCOUNT AGREEMENTS")]; (ii) It has not entered into, and until the termination of the this agreement will not enter into, any agreement with any other person relating the Pledged Accounts and/or any financial assets credited thereto pursuant to which it has agreed to comply with entitlement orders (as defined in Section 8-102(a)(8) of the UCC) or instructions (within the meaning of Section 9-104 of the UCC) of such other person; and (iii) It has not entered into, and until the termination of this agreement will not enter into, any agreement with the Debtor or the Trustee purporting to limit or condition the obligation of the Financial Institution to comply with entitlement orders or instructions. 7. ADVERSE CLAIMS. Except for the claims and interest of the Trustee and of the Debtor in the Pledged Accounts, the Financial Institution does not know of any lien on or claim to, or interest in, any Pledged Account or in any "financial asset" (as defined in Section 8-102(a) of the UCC) credited thereto. If any person asserts any lien, encumbrance or adverse claim (including any writ, garnishment, judgment, warrant of attachment, execution or similar process) against the Pledged Accounts or in any financial asset carried therein, the Financial Institution will promptly notify the Trustee and the Debtor thereof. 8. MAINTENANCE OF ACCOUNTS. In addition to, and not in lieu of, the obligation of the Financial Institution to honor entitlement orders and instructions as set forth in Section 3 hereof, the Financial Institution agrees to maintain the Pledged Accounts as follows: (a) Notice of Sole Control. If at any time the Trustee delivers to the Financial Institution a Notice of Sole Control in substantially the form set forth in Exhibit A hereto, the Financial Institution agrees that after receipt of such notice, it will take all instruction with respect to the Pledged Accounts solely from the Trustee and shall not comply with instructions or entitlement orders of any other person. (b) Statements and Confirmations. The Financial Institution will promptly send copies of all statements, confirmations and other correspondence concerning (i) any Securities Account and/or any financial assets credited thereto and (ii) any Deposit Account, simultaneously to each of the Debtor and the Trustee at the address for each set forth in Section 12 of this Agreement. (c) Tax Reporting. All items of income, gain, expense and loss recognized in any Securities Account and all interest, if any, relating to any Deposit Account, shall be reported to the Internal Revenue Service and all state and local taxing authorities under the name and taxpayer identification number of the Debtor. (d) Voting Rights. Until such time as the Financial Institution receives a Notice of Sole Control pursuant to subsection (a) of this Section 8, the Debtor shall direct the Financial Institution with respect to the voting of any financial assets credited to the Pledged Accounts. (e) Permitted Investments. Until such time as the Financial Institution receives a Notice of Sole Control signed by the Trustee, the Debtor shall direct the Financial Institution with respect to the selection of investments to be made for any Pledged Account that is a securities account; provided, however, that the Financial Institution shall not honor any instruction to purchase any investments other than investments of a type describe on Exhibit B hereto. 9. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE FINANCIAL INSTITUTION. The Financial Institution hereby makes the following representations, warranties and covenants: (a) The Pledged Accounts have each been established as set forth in Section 1 and such Pledged Accounts will be maintained in the manner set forth herein until termination of this Agreement; and (b) This Account Control Agreement is the valid and legally binding obligations of the Financial Institution. 10. INDEMNIFICATION OF FINANCIAL INSTITUTION. The Debtor and the Trustee hereby agree that (a) the Financial Institution is released from any and all liabilities to the Debtor and the Trustee arising from the terms of this agreement and the compliance of the Financial Institution with the terms hereof, except to the extent that such liabilities arise from the Financial Institution's negligence Exhibit C-C-12 and (b) the Debtor, its successors and assigns shall at all times indemnify and save harmless the Financial Institution from and against any and all claims, actions and suits of others arising out of the terms of this agreement or the compliance of the Financial Institution with the terms hereof, except to the extent that such arises from the Financial Institution's negligence, and from and against any and all liabilities, losses, damages, costs, charges, counsel fees and other expenses of every nature and character arising by reason of the same, until the termination of this agreement. 11. SUCCESSORS; ASSIGNMENT. The terms of this Agreement shall be binding upon, and shall inure to the benefit of, the parties hereto and their respective corporate successors or heirs and personal representatives who obtain such rights solely by operation of law. The Trustee may assign its rights hereunder only with the express written consent of the Financial Institution and by sending written notice of such assignment to the Debtor. 12. NOTICES. Any notice, request or other communication required or permitted to be given under this Agreement shall be in writing and deemed to have been properly given when delivered in person, or when sent by telecopy or other electronic means and electronic confirmation of error free receipt is received or two days after being sent by certified or registered United States mail, return receipt requested, postage prepaid, addressed to the party at the address set forth below. Debtor: Trustee: Financial Institution: Any party may change his address for notices in the manner set forth above. 13. TERMINATION. The obligations of the Financial Institution to the Trustee pursuant to this Control Agreement shall continue in effect until the security interests of the Trustee in each of the Pledged Accounts have been terminated pursuant to the terms of the Security Agreement and the Trustee has notified the Financial Institution of such termination in writing. The Trustee agrees to provide Notice of Termination in substantially the form of Exhibit C hereto to the Financial Institution upon the request of the Debtor on or after the termination of the Trustee's security interest in the Pledged Accounts pursuant to the terms of the Security Agreement. The termination of this Control Agreement shall not terminate the Pledged Accounts or alter the obligations of the Financial Institution to the Debtor pursuant to any other agreement with respect to the Pledged Accounts. Exhibit C-C-13 14. COUNTERPARTS. This Agreement may be executed in any number of counterparts, all of which shall constitute one and the same instrument, and any party hereto may execute this Agreement by signing and delivering one or more counterparts. [NAME OF DEBTOR] By: ----------------------------- Name: Title: WELLS FARGO BANK, NATIONAL ASSOCIATION as Trustee By: ----------------------------- Name: Title: [NAME OF INSTITUTION SERVING AS FINANCIAL INSTITUTION] By: ----------------------------- Name: Title: Exhibit C-C-14 Exhibit A [Letterhead of Trustee] [Date] [Name and Address of Financial Institution] Attention: __________________ Re: Notice of Sole Control Ladies and Gentlemen: As referenced in the Account Control Agreement, dated _______, 200_, among [insert name of the Debtor], you and the undersigned (a copy of which is attached) we hereby give you notice of our sole control over each of the Pledged Accounts and all financial assets or funds credited thereto. You are hereby instructed not to accept any direction, instructions or entitlement orders or instructions with respect to the Pledged Accounts or the financial assets or funds credited thereto from any person other than the undersigned, unless otherwise ordered by a court of competent jurisdiction. You are instructed to deliver a copy of this notice by facsimile transmission to [insert name of the Debtor]. Very truly yours, WELLS FARGO BANK, NATIONAL ASSOCIATION as Trustee By: ______________________ Name: Title: cc: [Name of Debtor] Exhibit C-C-15 Exhibit B Permitted Investments Exhibit C-C-16 Exhibit C [Letterhead of Trustee] [Date] [Name and Address of Financial Institution] Attention: Re: Termination of Account Control Agreement You are hereby notified that the Account Control Agreement between you, [THE DEBTOR] and the undersigned (a copy of which is attached) is terminated and you have no further obligations to the undersigned pursuant to such Agreement. Notwithstanding any previous instructions to you, you are hereby instructed to accept all future directions with respect to account number(s) ______________ from [THE DEBTOR]. This notice terminates any obligations you may have to the undersigned with respect to such account, however nothing contained in this notice shall alter any obligations which you may otherwise owe to [THE DEBTOR] pursuant to any other agreement. You are instructed to deliver a copy of this notice by facsimile transmission to [insert name of Debtor]. Very truly yours, WELLS FARGO BANK, NATIONAL ASSOCIATION As Trustee By: ______________________ Name: Title: cc: [Name of Debtor] Exhibit C-C-17 EXHIBIT C TO PLEDGE AND SECURITY AGREEMENT FORM OF PERSONAL PROPERTY SECURITY INTEREST OPINION [INSERT DATE] [INSERT FULL NAME AND ADDRESS OF THE TRUSTEE] RE: ATLANTIC COAST ENTERTAINMENT HOLDINGS, INC. Ladies and Gentlemen: We have acted as special counsel to Atlantic Coast Entertainment Holdings, Inc., a Delaware corporation (the "Company"), each of the Company's subsidiaries listed on Schedule 1 hereto (each of the Company and such subsidiaries, a "Grantor" and, collectively, the "Grantors"), in connection with the preparation, execution and delivery of the Pledge and Security Agreement, dated [the date hereof] (the "Security Agreement"), between each of the Grantors and WELLS FARGO BANK, NATIONAL ASSOCIATION, as trustee (the "Trustee") for the Holders under an Indenture dated as of July 22, 2004 among Atlantic Coast Entertainment Holdings, Inc., a Delaware corporation (the "Company"), as issuer, the Secured Party, as trustee, and ACE Gaming, LLC, a New Jersey limited liability company, as a ("ACE"), as guarantor (the "Indenture")This opinion is being delivered pursuant to Section [ ] of the Security Agreement. In our examination we have assumed the genuineness of all signatures including endorsements, the legal capacity of natural persons, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as facsimile, electronic, certified or photostatic copies, and the authenticity of the originals of such copies. As to any facts material to this opinion which we did not independently establish or verify, we have relied upon statements and representations of the Grantors and their officers and other representatives and of public officials, including the facts and conclusions set forth therein. In rendering the opinions set forth herein, we have examined and relied on originals or copies of the following: (a) the Security Agreement; (b) [the letter, dated [INSERT DATE] from each Grantor to the Trustee authorizing the filing of UCC financing statements (the "Authorization Letter");] (c) an acknowledgment copy of a financing statement bearing file date _____ and file number _____ [ALTERNATIVELY: an unfiled copy of a financing statement] [ALTERNATIVELY: a print out of a confirmation of an electronic data transmission of financing statement information, bearing file date_____ and file number_____] identifying the name of each Grantor listed on Schedule 2 Exhibit C-C-18 hereto, as debtor and "Wells Fargo Bank, National Association, as Trustee", as secured party, which was filed [ALTERNATIVELY: we understand will be filed within ten (10) days of the transfer of the security interest] in the filing office identified opposite each Grantor's name on Schedule 2 hereto (such filing office(s), the "Filing Office(s)" and such financing statement, the "Financing Statement(s)"); (d) the account agreement dated as of ________ between [IDENTIFY NAME OF APPLICABLE GRANTOR] and the Financial Institution pursuant to which the Pledged Account (as such terms are defined below) was established; (e) a certified copy of the organization document identified on Schedule 3 hereto as to each Grantor's existence in such state (the "Secretary of State Certificates"); and (f) such other documents as we have deemed necessary or appropriate as a basis for the opinions set forth below. Capitalized terms used herein and not otherwise defined herein shall have the same meanings as set forth in the Security Agreement. As used herein: (i) "UCC" means (a) the New York UCC, (b) the Filing State UCC, and (c) the [IDENTIFY NAME OF STATE OF FINANCIAL INSTITUTION'S JURISDICTION AS IDENTIFIED IN (VIII) BELOW] UCC (in each case as such term is defined below), as applicable. (ii) "UCC Collateral" means the Collateral (as such term is defined in the Security Agreement) to the extent such collateral is of a type subject to Article 9 of the UCC. (iii) "Delaware UCC" means the Uniform Commercial Code as in effect on the date hereof in the State of Delaware (without regard to laws referenced in Section 9-201 thereof). (iv) "New York UCC" means the Uniform Commercial Code as in effect on the date hereof in the State of New York (without regard to laws referenced in Section 9-201 thereof). (v) "Filing State" means [IDENTIFY NAME OF STATE(S) WHERE THE FINANCING STATEMENTS ARE FILED]. (vi) "Filing State UCC" means the Uniform Commercial Code as in effect on the date hereof in the Filing State (without regard to laws referenced in Section 9-201 thereof). (vii) "Possessory Certificates" means the certificates identified on Schedule 4 hereto. (viii) "[IDENTIFY NAME OF STATE OF FINANCIAL INSTITUTION'S JURISDICTION] UCC" means the Uniform Commercial Code as in effect on the date hereof in the State of [IDENTIFY NAME OF STATE OF FINANCIAL INSTITUTION'S JURISDICTION] (without regard to laws referenced in Section 9-201 thereof). (ix) "Pledged Account" means account number [INSERT ACCOUNT NUMBER] established at [INSERT NAME OF FINANCIAL INSTITUTION THAT ESTABLISHED THE PLEDGED ACCOUNT] in the name of [INSERT EXACT NAME ON ACCOUNT]. Exhibit C-C-19 (x) "Financial Institution" means [INSERT NAME OF FINANCIAL INSTITUTION THAT ESTABLISHED THE PLEDGED ACCOUNT]. We express no opinion with respect to any laws other than the UCC and, for purposes of opinion paragraph 5, [INSERT CORPORATE LAW OF FILING STATE, E.G., THE DELAWARE GENERAL CORPORATION LAW]. We have this date delivered to you our opinion with respect to the enforceability of the Security Agreement and certain other transaction agreements. We call to your attention that the opinions set forth herein with respect to the security interest of the Trustee are subject to the qualifications contained in such other opinion. Based upon the foregoing and subject to the limitations, qualifications, exceptions and assumptions set forth herein, we are of the opinion that: 1. Under the Delaware UCC, the provisions of the Security Agreement are effective to create a valid security interest in each Grantor's rights in the UCC Collateral in favor of the Trustee to secure the Secured Obligations (as defined in the Security Agreement). 2. [TO BE GIVEN BY LOCAL COUNSEL, IF APPROPRIATE] Pursuant to the [Authorization Letter][Security Agreement], each Grantor has authorized for purposes of Section 9-509 of the Filing State UCC the filing of the Financing Statement naming such Grantor as debtor and identifying the UCC Collateral. 3. [TO BE GIVEN BY LOCAL COUNSEL, IF APPROPRIATE] Each of the Financing Statements includes not only all of the types of information required by Section 9-502(a) of the Filing State UCC but also the types of information without which the Filing Office may refuse to accept the Financing Statements pursuant to Section 9-516 of the Filing State UCC. 4. [TO BE GIVEN BY LOCAL COUNSEL, IF APPROPRIATE] Under the Filing State UCC, the security interest of the Trustee will be perfected in each of the Grantor's rights in all UCC Collateral upon the later of the attachment of the security interest and the filing of the Financing Statements in the Filing Office, we express no opinion, with respect to (i) money, (ii) deposit accounts, (iii) letter of credit rights (iv) goods covered by a certificate of title statute, (v) as-extracted collateral, timber to be cut, (vi) any property subject to a statute, regulation or treaty of the United States whose requirements for a security interest's obtaining priority over the rights of a lien creditor with respect to the property preempt Section 9-310(a) of the Filing State UCC or (vii) any goods subject to a negotiable document of title. 5. [TO BE GIVEN BY LOCAL COUNSEL, IF APPROPRIATE] You have asked whether each Grantor is a "registered organization" as defined in the Filing State UCC. Pursuant to [IDENTIFY SECTION REFERENCE OF APPLICABLE CORPORATE LAW, E.G., SS.SS.101(A) AND 103(6) OF THE DELAWARE GENERAL CORPORATION LAW], the [SECRETARY OF STATE] of the Filing State is required to maintain a public record showing each Grantor to have been organized. Based on our review of the Secretary of State Certificates, we are of the opinion that under the Filing State UCC and the [INSERT CORPORATE LAW OF FILING STATE], each Grantor is a "registered organization." 6. Assuming that none of the Trustee or any Secured Party has notice of any adverse claims with respect to the Possessory Certificates and that such certificates are indorsed in blank Exhibit C-C-20 or by an effective indorsement to the Trustee, the Trustee will acquire such Possessory Certificates (and the shares represented thereby) free of any adverse claims under Section 8-303 of the New York UCC upon the later of the attachment of the security interest and the delivery of such Possessory Certificates to the Trustee. As used herein, "notice of adverse claim" has the meaning set forth in Section 8-105 of the UCC and includes, without limitation, any adverse claim that the Trustee or any Secured Party would discover upon any investigation which such person has a duty, imposed by statute or regulation, to investigate. 7. Under the [IDENTIFY NAME OF STATE OF FINANCIAL INSTITUTION'S JURISDICTION] UCC, the provisions of the Control Agreement are effective to perfect the security interest of the Trustee in [IDENTIFY NAME OF APPLICABLE GRANTOR]'s rights in the Pledged Account. Our opinions are subject to the following qualifications: (a) We have assumed that each Grantor owns, or with respect to after-acquired property will own, the UCC Collateral granted by it, and we express no opinion as to the nature or extent of each Grantor's rights in any of the applicable UCC Collateral and we note that with respect to any after-acquired property, the security interest will not attach until such Grantor acquires ownership thereof. (b) Our opinion with respect to proceeds is subject to the limitations set forth in Section 9-315 of the UCC and, in addition, we call to your attention that in the case of certain types of proceeds, other parties such as holders in due course, protected purchasers of securities, persons who obtain control over securities entitlements and buyers in the ordinary course of business may acquire a superior interest or may take their interest free of the security interest of a secured party. (c) We express no opinion with respect to commercial tort claims. (d) We express no opinion with respect to any goods which are accessions to, or commingled or processed with, other goods to the extent that the security interest is limited by Section 9-335 or 9-336 of the UCC. (e) We note that we have delivered to you our opinion with respect to each Grantor's status as a "registered organization." Except to the extent that this determination is an element of your choice of law analysis, we express no opinion with respect to the choice of law governing perfection, the effect of perfection and non-perfection or priority of the security interest. (f) For purposes of our opinion paragraph 5, we have assumed that each Grantor is and will remain "organized solely" (within the meaning of Section 9-102(a)(70) of the UCC) under the laws of the State of the Filing State. (g) We express no opinion with respect to the nature or extent of the securities intermediary's rights in, or title to, the securities or other financial assets underlying any "security entitlement" now or hereafter credited to a securities account. Furthermore, we express no opinion with respect to any property or assets now or hereafter credited to a securities account that is not a "financial asset" and we express no opinion whether or to what extent any particular item of property credited to such securities account is a "financial asset". We note that to the extent the securities intermediary maintains any financial asset in a "clearing corporation" (as defined in Section 8-102(5) of the UCC), Exhibit C-C-21 pursuant to Section 8-111 of the UCC, the rules of such clearing corporation may affect the rights of the securities intermediary. (h) We have assumed that the Control Agreement is the legal, valid, binding and enforceable obligation of each of the parties thereto other than the applicable Grantor. (i) We have assumed that the Pledged Account is either a "deposit account" (as defined in the UCC) and the Financial Institution is an organization that is engaged in the business of banking or (ii) is a "securities account"(as defined in the UCC) and the Financial Institution in the ordinary course of its business maintains securities accounts for customers and is acting in that capacity. (j) We call to your attention that pursuant to Section 9-340 of the UCC, a bank with which a deposit account is maintained may continue to exercise any right of recoupment or set-off against a secured party that holds a security interest in the deposit account. This opinion is being furnished only to you in connection with the Security Agreement and is solely for your benefit and is not to be used, circulated, quoted or otherwise referred to for any other purpose or relied upon by any other person or entity for any purpose without our prior written consent except that subsidiaries of the Company who subsequently become assignees pursuant to Section __ of the Notes or the Indenture may rely on it as if it was addressed to the Trustee for their benefit. Very truly yours, Exhibit C-C-22 SCHEDULE 1 List of Subsidiaries of Atlantic Coast Entertainment Holdings, Inc. - ---------------------------------------- --------------------------------------- FULL NAME OF GRANTOR Jurisdiction of Organization - ---------------------------------------- --------------------------------------- Exhibit D-A-1 SCHEDULE 2 Schedule Information on face of Financial Statements
Full Name of Full Name of Filing Grantor Secured Party Filing Office Jurisdiction File Number File Date
Exhibit D-A-2 SCHEDULE 3 Certificates of Organization
Type of Organization Public Office(r) Full Name of Grantor Document State of Organization Date of Certificates Issuing Certificates
Exhibit D-A-3 SCHEDULE 4 Possessory Certificates
Issuer Certificate Numbers Registered Owner Number of Shares Certificate Date
Exhibit D-A-4 EX-10.3 9 file009.txt ASSIGNMENT OF LEASES This Assignment of Leases was prepared by and after recording should be returned to: Mitchell S. Berkey, Esq. Wolff & Samson PC One Boland Drive West Orange, New Jersey 07052 ASSIGNMENT OF LEASES THIS ASSIGNMENT (the "Assignment") made as of the 22nd day of July, 2004 by ACE GAMING LLC, a New Jersey limited liability company having an address at the Sands Hotel and Casino, Indiana Avenue and Brighton Park, Atlantic City, New Jersey 08401 (the "Assignor"), in favor of WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, having its corporate trust office at Sixth and Marquette, Minneapolis, Minnesota 55479 as Trustee (the "Assignee") under the Indenture described below for its own benefit and the benefit of the holders (the "Holders") of the Securities (as defined below). W I T N E S S E T H WHEREAS, the Assignor is the owner of a fee simple interest in certain land and air spaces situated in the City of Atlantic City, County of Atlantic, State of New Jersey ("Atlantic City"), being more particularly described on Schedule A-1 attached hereto and by this reference made a part hereof (the "Casino Land") and the improvements now or hereafter constructed on the Casino Land, a portion of which constitute the Sands Hotel and Casino (the "Sands"); WHEREAS, the Assignor is the owner of a fee simple interest in certain land and air spaces situated in Atlantic City, being more particularly described on Schedule A-2 attached hereto and by this reference made a part hereof (the "Office Land") and the improvements now or hereafter constructed on the Office Land; WHEREAS, the Assignor is the owner of certain land situated in the City of Atlantic City, County of Atlantic, State of New Jersey, being more particularly described on Schedule A-3 attached hereto and by this reference made a part hereof (the "Expansion Land" and the improvements now or hereafter constructed on the Expansion Land (the Casino Land, the Office Land, and the Expansion Land being collectively referred to herein as the "Land"); WHEREAS, the Assignor is the owner of an easement interest in the parcels of real property situated in Atlantic City more particularly described on Schedule A-4 attached hereto and by this reference made a part hereof (the "Easement") and the improvements now or hereafter constructed on the Easement; WHEREAS, the Easement was granted to Assignor pursuant to that certain Ordinance No. 103 of Atlantic City dated October 7, 1987 and was recorded January 29,1993 in the Atlantic County, New Jersey Clerk's Office in Deed Book 5463, Page 228 (the "Easement Ordinance"); WHEREAS, the Assignor is the sole owner and holder of the lessee's interest (the "Leasehold Estate") under the Lease dated December 18, 2000 originally between Madison House Group, L.P., as lessor, and Greate Bay Hotel and Casino, Inc., as lessee (the "Madison House Lease"), with respect to certain property located in the City of Atlantic City, County of Atlantic and State of New Jersey commonly known as 125 Dr. Martin Luther King Boulevard and more particularly described on Schedule A-5 attached hereto and by this reference made a part hereof. WHEREAS, pursuant to an Indenture, dated as of the date hereof (as the same may hereafter be amended, supplemented or otherwise modified, the "Indenture"; capitalized terms not otherwise defined herein are used herein as defined therein), among the Assignor, Assignee, and Atlantic Coast Entertainment Holdings, Inc. (the "Company"), the Company is issuing, on the date hereof, up to $110 million of 3% Notes Due 2008 (the "First Mortgage Notes" or the "Securities"); WHEREAS, the Assignor has guaranteed repayment of the Securities and payment and performance by the Company of its other obligations under the Indenture and with respect to the Securities pursuant to the guarantee contained in Article 12 of the Indenture (as the same may hereafter be amended, supplemented or otherwise modified, the "Guarantee"); WHEREAS, it is a condition precedent to the issuance of the Securities that the obligations of the Assignor under the Guarantee be secured by, inter alia, this assignment of the Assignor's interest in all leases affecting: (i) the Land; (ii) the Easement, (iii) the Leasehold Estate and (iv) all improvements situated thereon (the "Premises"); WHEREAS, this Assignment is being executed and delivered pursuant to the terms and conditions set forth in the Indenture and is entitled to the benefits thereof. NOW, THEREFORE, for good and valuable consideration, the legal sufficiency of which is hereby acknowledged, the Assignor does hereby sell, assign, transfer, set over and deliver unto the Assignee, subject to the terms and conditions of this Assignment: ALL right, title and interest of the Assignor, as lessor, in and to (i) any and all space leases now or hereafter affecting the Premises and including, without limitation, any and all rentals or lettings of individual rooms or suites in the Premises (the "Room Lettings") and (ii) any extensions, renewals, modifications thereof and any guaranties of the obligations owed the Assignor thereunder ((i) and (ii) above are hereinafter described individually as a "Lease" and collectively as the "Leases"; a Lease providing for the payment by a tenant thereunder of an annual basic rental equal to or in excess of $500,000 shall hereafter be referred to individually as a "Major Lease" and collectively as "Major Leases"); TOGETHER with all right, title and interest of the Assignor in or to the immediate and continuing right to collect and receive all of the rents, income, receipts, revenues, issues and profits now due or which may become due or to which the Assignor may now or shall hereafter 2 become entitled or may demand or claim, arising or issuing from or out of the Leases or from or out of the Premises or any part thereof, together with any and all rights and claims of any kind which the Assignor may have against the tenants under any Lease (all such moneys, rights and claims being collectively referred to as the "rents"); TOGETHER with all of the Assignor's right, title, privileges and prerogatives under the Leases, including, without limitation, the Assignor's right, title, privileges and prerogatives to terminate, cancel, modify, change, supplement, alter, amend or grant any consent or approval under the Leases; TO HAVE AND TO HOLD the same unto the Assignee, its successors and assigns forever or for such shorter period as hereinafter may be provided; FOR THE PURPOSE OF SECURING: the payment and performance by Assignor of its obligations, covenants and duties pursuant to the Guarantee, SUBJECT, however, to a license hereby granted by the Assignee to the Assignor to collect and receive rents under the Leases and otherwise to hold and exercise all rights, privileges and benefits contemplated herein; and TO PROTECT THE SECURITY OF THIS ASSIGNMENT, IT IS COVENANTED AND AGREED AS FOLLOWS: 1. The Assignor represents and warrants that the Assignor has good title to the Leases and rents hereby assigned and authority to assign the same, and that no other Person has any right, title or interest therein. The Assignor further represents and warrants that (i) Schedule 1 attached to this Assignment is a correct and complete list of all Leases affecting the Premises on the date hereof (other than the Room Lettings), (ii) to the best of Assignor's knowledge, each Lease listed on Schedule 1 is in full force and effect and unamended, except as shown on Schedule 1, (iii) a correct and complete copy of each such Lease has been delivered by the Assignor to the Assignee on or prior to the date hereof, (iv) to the best knowledge of the Assignor, there exists no material default or event of default in the performance of any covenant, agreement, obligation or conditions contained in any Lease listed on Schedule 1 and no notice of default under any such Lease has been given and (v) the Assignor has not previously assigned, transferred, mortgaged or pledged the Leases or the rents pursuant to an instrument still in effect on the date hereof. 2. The Assignor covenants and agrees at its sole cost and expense, to keep, observe, perform and discharge, duly and punctually, all material obligations, terms, covenants, conditions and warranties of the Leases on the part of the Assignor to be kept, observed, performed and discharged in accordance therewith. The Assignor agrees (i) not to modify the terms of any of the Major Leases in a manner (in the aggregate for all such amendments) materially adverse to the interests of the holders of the Securities hereunder, (ii) not to terminate or cancel the term of any Major Lease nor accept a surrender thereof unless a duly authorized officer of the Assignor certifies to the Assignee that such termination, cancellation or surrender will not materially adversely affect the interest of the holders of the Securities hereunder, or unless such surrender is required by the terms of such Major Lease, (iii) not to consent to any 3 assignment by a tenant of its interest in any Major Lease, unless a duly authorized officer of the Assignor certifies to the Assignee that such assignment will not materially adversely affect the interest of the holders of the Securities hereunder, provided, however that if the tenant under any Major Lease shall have the right to assign its interest in such Major Lease without the consent of the Assignor, then clause (iii) shall not apply to such Major Lease, (iv) not to waive or release the other parties to a Major Lease from any material obligations or conditions to be performed by them, and (v) except in connection with the incurrence or grant of Liens permitted under the Indenture, not to make any assignment of Assignor's interest in any Major Lease to any Person unless a duly authorized officer of the Assignor certifies to the Assignee that such assignment will not materially adversely affect the interest of the holders of the Securities hereunder. The Assignor agrees not to accept payments of rent in advance under the Leases (other than Room Lettings) which payments would in the aggregate for all Leases (other than Room Lettings) exceed $1,000,000 (except prepayments in the nature of security for the performance by the lessees thereunder or for tenant finish work performed with respect to any such Leases (other than Room Lettings)). 3. Except during such time as an Event of Default shall have occurred and be continuing, the Assignor shall have the right, under a license (the "license") granted hereby (but limited as provided in the following paragraph), to collect upon all of the rents arising under the Leases and otherwise exercise all rights, benefits and privileges thereunder. 4. For so long as an Event of Default has occurred and is continuing, the following provisions shall apply: (a) The Assignee shall have the complete right, power and authority hereunder then or thereafter to exercise and enforce any or all of the following remedies: (i) to terminate upon notice to the Assignor the license granted to the Assignor to collect as aforesaid the rents, and then and thereafter, without taking possession, in the Assignee's or the Assignor's own name, or as attorney-in-fact for the Assignor, to demand, collect, receive, sue for, attach and levy the rents, to give proper receipts, releases and acquaintances therefor and after deducting all reasonable costs and expenses of operation and collection, as determined by the Assignee, including attorneys' fees and disbursements, to apply the net proceeds thereof, together with any funds of the Assignor deposited with the Assignee, to any indebtedness secured hereby and in such order as the Assignee may determine in accordance with Section 506 of the Indenture, (ii) without regard to the adequacy of the security, with or without any action or proceeding through any Person or by agent, or by a receiver to be appointed by any court and irrespective of the Assignor's possession, then or thereafter to enter upon the Premises and succeed to the Assignor's rights and obligations as lessor under such Leases, and (iii) otherwise do any act or incur any costs or expenses as the Assignee shall deem reasonably proper to protect the security hereof, as fully and to the 4 same extent as the Assignor could do if in possession and in such event to apply the rents so collected to the costs of fulfilling the Assignor's rights and obligations as lessor under the Leases, but in such order as the Assignee shall deem proper, and including the payment of any indebtedness secured hereby in accordance with Section 506 of the Indenture); (b) Without limiting the generality of the foregoing paragraph, the Assignee may: (i) succeed to the Assignor's rights and obligations as lessor under the Leases; (ii) lease any part or parts of the Premises for such periods of time, and upon such terms and conditions, as the Assignee may, in its reasonable discretion, deem proper; (iii) enforce, cancel or modify the Leases; (iv) demand, collect, sue for, attach, levy, recover, receive, compromise and adjust, and make, execute and deliver receipts and releases for all rents and rights under the Leases and written agreements relating thereto that may then be or may thereafter become due; (v) institute, prosecute to completion or compromise and settle all summary proceedings, actions for rent or for removing any and all lessees, tenants, subtenants or occupants of the Premises; and/or (vi) make such repairs and alterations to the Premises as the Assignee may, in its reasonable discretion, deem proper; (c) Upon termination of the Assignor's license by the Assignee by reason of the continuance of an Event of Default, the Assignor shall be deemed to have directed and does direct each and all of the tenants (other than persons in occupancy under Room Lettings) (i) to pay to the Assignee all rents as may then or thereafter be owing to the Assignee and (ii) to perform any obligations on its or their part to be then or thereafter performed for the benefit of the Assignor and relating to the Premises, and such obligors shall pay the sum(s) then due and thereafter to become due and perform the obligations then or thereafter owing without further inquiry. No such tenant or obligor shall be bound to account to the Assignor for any amounts paid to the Assignee by reason of any payment made to the Assignee following the termination of the Assignor's license; (d) The acceptance by the Assignee of this Assignment, with all of the rights, powers, privileges and authority so created, shall not, prior to entry upon and taking of possession of the Premises by the Assignee, be deemed or construed to constitute the Assignee in possession nor thereafter or at any time or in any event obligate the Assignee to appear in or defend any action or proceeding relating to the Leases or to the Premises, or to take any action hereunder or under the Leases, or 5 to expend any money or incur any expenses or perform or discharge any obligation, duty or liability under the Leases; nor shall the Assignee be liable in any way for any injury or damage to person or property sustained by any Person or Persons in or about the Premises, except for gross negligence or willful misconduct on the part of the Assignee; (e) The collection of the rents as aforesaid and/or the entry upon and taking possession of the Premises shall not cure or waive any Event of Default or waive, modify or affect any notice of Default under the Indenture, the Securities, the Mortgage, the Security Agreement or any Security Instrument or invalidate any act done pursuant to such notice, and the enforcement of such right or remedy by the Assignee, once exercised, shall continue for so long as the Assignee shall elect, provided that if the collection and application aforesaid of the rents has cured the original Event of Default or such Event of Default has otherwise been cured, the Assignee agrees to reinstate the license described herein. If the license has been so reinstated or the Assignee shall thereafter elect to discontinue the exercise of any such right or remedy notwithstanding the continuation of an Event of Default, the same or any other right or remedy hereunder may be reasserted at any time and from time to time following any subsequent Event of Default. (f) Anything herein to the contrary notwithstanding, the rights of the Assignee to collect or retain any sums shall not apply to amounts to be used by Assignor to cure an Event of Default or otherwise make any payment in respect of Securities or make any payment or perform any obligation under the Indenture or other Security Document (all of which, whether paid to Assignor or Assignee, shall be made available to Assignor for such purpose). 5. The failure of the Assignee to avail itself of any of the terms, covenants and conditions of this Assignment for any period of time or at any time or times shall not be construed or deemed to be a waiver of any such term, covenant or condition, and nothing herein contained, nor anything done or omitted to be done by the Assignee pursuant hereto shall be deemed a waiver by the Assignee of any of its rights and remedies hereunder or under the Guarantee, the Indenture, the Securities, the Mortgage, the Security Agreement or any Security Documents or under the laws of the State of New Jersey or the State of New York. The right of the Assignee to collect the said indebtedness and to enforce any other security therefor may be exercised by the Assignee, either prior to, simultaneously with or subsequent to any action taken hereunder. 6. The Assignee and the purchaser at any foreclosure sale shall have the right following foreclosure of the lien of the Mortgage to preserve any Lease and the rights of Assignor thereunder. Any Lease hereafter entered into shall contain a covenant by the other parties thereto to attorn to or perform for the benefit of any such purchaser. 7. The Assignee shall not be obligated to perform or discharge any obligation of the Assignor as a result of the assignment hereby effected, and the Assignor agrees to indemnify and hold harmless the Assignee against any and all liability, loss or damage which the Assignee may incur by reason of any act of the Assignee under this Assignment, other than such losses as shall 6 arise out of the gross negligence or willful misconduct of the Assignee. Should the Assignee incur any such liability, loss or damage by reason of this Assignment, or in defense against any such claims or demands made with respect to any act of the Assignee under this Assignment, other than those incurred by reason of the Assignee's gross negligence or willful misconduct, the amount thereof, including reasonable costs, expenses and reasonable attorneys' fees, together with interest thereon at the same rate as borne under the Securities (but in no event to exceed the maximum lawful rate) shall be included in the indebtedness secured by the Mortgage, the Security Agreement and any Security Documents and the Assignor shall reimburse the Assignee therefor within five (5) days following written demand, provided that no interest shall accrue with respect to any amount so incurred unless, and to the extent, actually paid by the Assignee. 8. The Assignor agrees from time to time to execute and deliver all such instruments and to take all such action for the purpose of further effectuating this Assignment and the carrying out of the terms hereof as may be reasonably requested in writing by the Assignee. The Assignee agrees that at such time as the indebtedness evidenced by the Securities has been fully paid and the Assignor's obligations under the Guarantee have been paid and performed in full, the Assignee shall execute and deliver and take all such action as may be reasonably necessary to terminate this Assignment. 9. Neither the Assignee nor its successors and assigns shall be deemed a mortgagee in possession, nor shall the Assignee or its successors and assigns be liable for laches, failure to collect the rents or failure to enforce the Leases. 10. Neither the execution of this Assignment nor any action or inaction on the part of the Assignee under this Assignment shall release the Assignor from any of the obligations under the Leases or constitute an assumption of any such obligations on the part of the Assignee. No action or failure to act on the part of the Assignor shall adversely affect or limit, in any way, the rights of the Assignee under this Assignment, the Guarantee, the Indenture, the Securities, the Mortgage or any Security Document or, through this Assignment, under the Leases. 11. If the Assignee shall resign or become disqualified from acting as Trustee (whether through disqualification by the Casino Control Commission or otherwise), or if, for any reason, there shall be appointed a substitute Trustee, to act instead of the aforenamed Trustee, such substitute shall succeed to all the estates, rights, powers and duties of the aforenamed Trustee under this Assignment. Should any instrument of any nature be required from the Assignor by any successor Trustee to more fully and certainly vest in and confirm to such successor Trustee such estates, rights, powers and duties, then upon request by such successor Trustee, any and all such instruments shall be made, executed, acknowledged and delivered and shall be caused to be recorded and/or filed by the Assignor. Any successor Trustee appointed pursuant to any of the provisions hereof shall, without any further act, deed or conveyance become vested with all the estates, properties, rights, powers and trusts of its or his predecessor as an Assignee with like effect as if originally named as Trustee and the Assignee hereby. 12. This Assignment and the rights and obligations of the parties hereunder shall be construed and enforced in accordance with and governed by the law of the State of New Jersey. 7 13. To the extent permitted by law, the Assignor further waives any claims against the Assignee for consequential, punitive or special damages arising in connection with the Indenture, the Guarantee, the Mortgage, the Security Agreement or any Security Document and further waives the right to interpose any defense based on any statute of limitations or any claim of laches arising in connection with the Indenture, the Guarantee, the Mortgage, the Security Agreement or any Security Document and any set off or counterclaim of any nature or description, it being understood that the Assignor is not liable except to the extent of the Collateral pledged pursuant to the Indenture. 14. If any term, covenant, condition or provision of this Assignment or the application thereof to any circumstance or to any Person shall be invalid or unenforceable to any extent, the remaining terms, covenants, conditions and provisions of this Assignment, or the application thereof to any circumstances or to any Person other than those as to which any term, covenant, condition or provision is held invalid or unenforceable, shall not be affected thereby and each remaining term, covenant, condition and provision of this Assignment shall be valid and shall be enforceable to the fullest extent permitted by law. 15. The Assignee and Assignor acknowledge and agree that: (i) all security interest and other rights in Leases, rents, Premises and any other Collateral shall be, and hereby are, subject and inferior to any Liens heretofore or hereafter created from time to time in connection with the incurrence of Working Capital Indebtedness; and (ii) notwithstanding anything to the contrary hereunder or in the Indenture or in the other Security Documents, the Assignor may incur Liens and Indebtedness (including, without limitation, Liens on Leases, rents, Premises or other Collateral) permitted by the Indenture. In connection with any of the foregoing, Assignee will, at the request of Assignor, enter into such intercreditor agreements, standstill agreements, subordination agreements and other documents as shall be appropriate under the circumstances for the benefit of the holder of such other Liens or Indebtedness. Assignor shall have the right to sell, transfer and convey (the "Sale") the Collateral in whole or in part (the Collateral which is the subject of such Sale is hereinafter referred to as the "Conveyed Property") and in connection therewith obtain from Assignee a release of the Conveyed Property from the Lien of this Collateral and the Security Agreement provided that such Sale is made in accordance with the provisions of Section 1017 of the Indenture as if such Sale was an Asset Sale, as the term is defined in the Indenture, regardless of whether such Sale was in fact an Asset Sale. In connection therewith, Assignee shall execute, acknowledge and deliver to Assignor such documents as Assignor may reasonably require to effectuate such release. The Liens granted hereunder shall not and shall not be deemed to, apply to any Excluded Property (as defined in the Security Agreement). 16. This Assignment shall not be amended, modified, discharged, waived, in whole or in part, except by an agreement signed by the Assignor and the Assignee. 17. In this Assignment, whenever the context so requires, the masculine gender shall include the feminine and/or neuter and the singular number shall include the plural and conversely in each case. All demands, notices, requests and communications hereunder shall be given as provided in the Indenture. 8 18. Each of the provisions of this Assignment is subject to and shall be enforced in compliance with the provisions of the Casino Control Act. 19. THE ASSIGNOR ACKNOWLEDGES THAT IT HAS RECEIVED A TRUE COPY OF THIS ASSIGNMENT WITHOUT CHARGE. [SIGNATURES SET FORTH ON FOLLOWING PAGE] * * * * 9 IN WITNESS WHEREOF, this Assignment has been duly executed by the Assignor the day and year first above written. Attest ACE GAMING, LLC a New Jersey Limited Liability Corporation By: /s/ Patricia Wild ------------------ Name: Patricia Wild Title: Vice President, General Counsel, Secretary By:/s/ Douglas S. Niethold ----------------------- Name: Douglas S. Niethold Title: Vice-President, Finance and Chief Financial Officer 10 COUNTY OF NEW YORK ) : SS.: STATE OF NEW YORK ) BE IT REMEMBERED, that on this 22nd day of July, 2004, before me the subscriber, a Notary Public of the State of New York, personally appeared Patricia Wild, who is Vice President, General Counsel and Secretary of ACE GAMING, LLC, a New Jersey limited liability company and the mortgagor named in the within instrument, who I am satisfied is the person who executed the within instrument, as Vice-President, General Counsel and Secretary of said company, and she acknowledged that she signed and delivered the same as such officer, that the within instrument is the voluntary act and deed of such company made by virtue of authority of its members, on, behalf of and as the voluntary act and deed of such company, for the uses and purposes therein expressed, and that she received a true copy of the within instrument on its own behalf and on behalf of the mortgagor named therein. Subscribed before me this 22nd day of July 2004. /s/ Ellen Warren - ---------------- Notary Public 11 STATE OF NEW YORK ) : SS.: COUNTY OF NEW YORK ) On July 22, 2004, before me, the subscriber, a Notary Public of the State of New York, personally appeared Douglas S. Niethold who being by me duly sworn according to law on his oath saith that he is the Vice-President, Finance and Chief Financial Officer of ACE Gaming LLC, a New Jersey limited liability company, the above-named Assignor; that Patricia Wild is the Vice President, General Counsel and Secretary of the said company; that he saw the said Vice President, General Counsel and Secretary sign the Assignment as the act and deed of said company, she being thereunto duly authorized; and that he signed his name to the Assignment as an attesting witness. /s/ Ellen Warren ----------------------------- Notary Public of the State of New York 12 SCHEDULE A-1 Casino Land TRACT #1: BEGINNING at a point, in the Easterly line of Illinois Avenue, distant 350 feet Southwardly from the Southerly line of Pacific Avenue; and extending thence (1) Eastwardly, parallel with Pacific Avenue 151 feet to the Westerly line of Mt. Vernon Avenue; thence (2) Southwardly, in and along the said Westerly line of Mt. Vernon Avenue, 50 feet; thence (3) Westwardly, parallel with Pacific Avenue, 151 feet to the Easterly line of Illinois Avenue; thence (4) Northwardly, in and along the said Easterly line of Illinois Avenue, 50 feet to the place of BEGINNING. BEING KNOWN AS Part of Lot 10 in Block 48, formerly known as part of Lot 191 in Block 26, as shown on the Tax Map of the City of Atlantic City. Illinois Avenue now known as Dr. Martin Luther King Boulevard. TRACT #2: BEGINNING at a point in the Easterly line of Illinois Avenue 400 feet South of Pacific Avenue, and extending thence (1) Eastwardly, parallel with Pacific Avenue, 151 feet to the Westerly line of Mt. Vernon Avenue; thence (2) Southwardly, along same 50 feet; thence (3) Westwardly, parallel with Pacific Avenue, 151 feet to the Easterly line of Illinois Avenue; thence (4) Northwardly, along same 50 feet to the BEGINNING. BEING KNOWN AS Part of Lot 10 in Block 48, formerly known as part of Lot 191 in Block 26, as shown on the Tax Map of the City of Atlantic City. Illinois Avenue now known as Dr. Martin Luther King Boulevard. TRACT #3: BEGINNING at a point in the Westerly line of Kentucky Avenue (50 feet wide), said point being distant 200.00 feet South of the Southerly line of Pacific Avenue (60 feet wide); and extending from said beginning point the following courses and distances: (1) South 27 degrees 28 minutes 00 second East, in and along the Westerly line of Kentucky Avenue, a distance of 50.00 feet to a point; thence (2) South 62 degrees 32 minutes 00 seconds West, parallel with Pacific Avenue, a distance of 180.00 feet to the Easterly line of Mt. Vernon Avenue (19 feet wide); thence (3) North 27 degrees 28 minutes 00 seconds West, in and along the Easterly line of Mt. Vernon Avenue, a distance of 50.00 feet to a point; thence (4) North 62 degrees 32 minutes 00 seconds East, parallel with Pacific Avenue, a distance of 180.00 feet to the point and place of BEGINNING. BEING KNOWN AS Part of Lot 10 in Block 49, formerly known as part of Lot 192 in Block 26, as shown on the Tax Map of the City of Atlantic City. TRACT #4: BEGINNING at a point in the Easterly line of Mt. Vernon Avenue (19 feet wide), said point being distant 250.00 feet South of the Southerly line of Pacific Avenue (60 feet wide); and extending from said beginning point the following course and distances: (1) North 62 degrees 32 minutes 00 seconds East, parallel with Pacific Avenue, a distance of 30.00 feet to a point; thence (2) South 27 degrees 28 minutes 00 seconds East, parallel with Mt. Vernon Avenue, a distance of 50.00 feet to a point; thence (3) South 62 degrees 32 minutes 00 seconds West, parallel with Pacific Avenue, a distance of 30.00 feet to the Easterly line of Mt. Vernon Avenue; thence (4) North 27 degrees 28 minutes 00 seconds West, in and along the Westerly line of Mt. Vernon Avenue, a distance of 50.00 feet to the point and place of BEGINNING. BEING KNOWN AS Part of Lot 10 in Block 49, formerly known as Part of Lot 192 in Block 26, as shown on the Tax Map of the City of Atlantic City. TRACT #5: BEGINNING in the Westerly line of Kentucky Avenue, 250 feet Southwardly from Pacific Avenue; and extending thence (1) Westwardly, parallel with Pacific Avenue, 150 feet; thence (2) Southwardly, parallel with Kentucky Avenue, 50 feet; thence (3) Eastwardly. parallel with Pacific Avenue, 150 feet to the Westerly line of Kentucky Avenue; thence (4) Northwardly, in and along same 50 feet to the point and place of BEGINNING. BEING KNOWN AS Part of Lot 10 in Block 49, formerly known as Part of Lot 192 in Block 26, as shown on the Tax Map of the City of Atlantic City. TRACT #6: BEGINNING at a point in the Westerly line of Kentucky Avenue 300 feet Southwardly from the Southerly line of Pacific Avenue; and extending thence (1) Westwardly, parallel with Pacific Avenue, 180 feet; thence (2) Southwardly, parallel with Kentucky Avenue, 50 feet; thence (3) Eastwardly, parallel with Pacific Avenue, 180 feet to the Westerly line of Kentucky Avenue; thence (4) Northwardly, along same, 50 feet to the place of BEGINNING. BEING KNOWN AS Part of Lot 10 in Block 49, formerly known as Part of Lot 192 in Block 26, as shown on the Tax Map of the City of Atlantic City. TRACT #7: BEGINNING at a point in the Westerly line of Kentucky Avenue (50 feet wide) said point being distant 350.00 feet South of the Southerly line of Pacific Avenue (60 feet wide); and extending from said beginning point in the following course and distances: (1) South 27 degrees 28 minutes 00 seconds East, in and along the Westerly line of Kentucky Avenue, a distance of 91.40 feet; thence (2) South 62 degrees 32 minutes 00 seconds West, parallel with Pacific Avenue, a distance of 4.00 feet; thence (3) South 27 degrees 28 minutes 00 seconds East, parallel with Kentucky Avenue, a distance of 1.00 feet; thence (4) South 62 degrees 32 minutes 00 seconds West, parallel with Pacific Avenue, a distance of 26.00 feet; thence (5) South 27 degrees 28 minutes 00 seconds East, parallel with Kentucky Avenue, a distance of 0.75 feet; thence (6) South 62 degrees 32 minutes 00 seconds West, parallel with Pacific Avenue, a distance of 16.60 feet; thence (7) South 27 degrees 28 minutes 00 seconds East, parallel with Kentucky Avenue, a distance of 10.00 feet; thence (8) South 62 degrees 32 minutes 00 seconds West, parallel with Pacific Avenue, a distance of 133.40 feet to the Easterly line of Mt. Vernon Avenue (19 feet wide); thence (9) North 27 degrees 28 minutes 00 seconds West, in and along the Easterly line of Mt. Vernon Avenue, a distance of 103.15 feet; thence (10) North 62 degrees 32 minutes 00 seconds East, parallel with Pacific Avenue, a distance of 180.00 feet to the point and place of BEGINNING. BEING KNOWN AS Part of Lot 10 in Block 49, formerly known as Part of Lot 192 in Block 26, as shown on the Tax Map of the City of Atlantic City. ALSO BEING KNOWN AS proposed Lot 119.01 in Block 26 as shown on minor subdivision plan prepared by Dennis E. Duffy Associates, dated September 26, 1985 and filed in the Atlantic County Clerk's Office on February 6, 1986 as Map #2358. TRACT #8: BEGINNING at a point in the Easterly line of Indiana Avenue (60 feet wide), said beginning point being South 27 degrees 28 minutes 00 seconds East, 200.10 feet from where the Easterly line of Indiana Avenue is intersected by the Southerly line of Pacific Avenue (60 feet wide); and extending thence (1) South 27 degrees 28 minutes 00 seconds East, in and along the Easterly line of Indiana Avenue, 305.54 feet to a point; thence (2) North 62 degrees 30 minutes 00 seconds East, parallel with Pacific Avenue 350.75 feet to a point in the Westerly line of Illinois Avenue (50 feet wide); thence (3) In said Westerly line, North 27 degrees 28 minutes 00 seconds West, 305.64 feet to a point, said point being South 27 degrees 28 minutes 00 seconds East, 200.00 feet from the point of intersection of the Westerly line of Illinois Avenue, now known as Dr. Martin Luther King Boulevard with the Southerly line of Pacific Avenue; thence (4) South 62 degrees 30 minutes 00 seconds West, parallel with Pacific Avenue and along the line of the lands formerly of the Bala Motel, 150.75 feet to a point; thence (5) North 27 degrees 28 minutes 00 seconds West, parallel with Illinois and Indiana Avenue and along the line of the lands, now or late of the Bala Motel, 114.00 feet to a point; thence (6) South 62 degrees 30 minutes 00 seconds West, parallel with Pacific Avenue, 50.00 feet to a point; thence (7) South 27 degrees 28 minutes 00 seconds East, parallel with Illinois Avenue and Indiana Avenue, along the lands now or late of Midtown Motor Inn, 64.00 feet to a point; thence (8) North 62 degrees 30 minutes 00 seconds East, still in said line and parallel with Pacific Avenue 5.00 feet to a point; thence (9) South 27 degrees 28 minutes 00 seconds East, still in said line and parallel with Illinois and Indiana Avenue 50.10 to a point; thence (10) South 62 degrees 30 minutes 00 seconds West, still in said line and parallel with Pacific Avenue, 155.00 feet to the point and place of BEGINNING. SUBJECT to the easement for public right-of-way contained in deed Book 3684, page 254. BEING KNOWN AS Lot 12 in Block 47, formerly known as Lot 60 in Block 30, as shown on the Tax Map of the City of Atlantic City. Illinois Avenue now known as Dr. Martin Luther King Boulevard. TRACT #9: PARCEL A: BEGINNING at a point in the Easterly line of Mt. Vernon Avenue (19 feet wide), said point being distant 358.00 feet South of the Southerly line of Pacific Avenue (60 feet wide); and extending from said beginning point, the following courses and distances: (1) South 27 degrees 28 minutes 00 seconds East, in and along the Easterly line of Mt. Vernon Avenue, a distance of 15.15 feet: thence (2) South 62 degrees 32 minutes 00 seconds West, parallel with Pacific Avenue and crossing Mt. Vernon Avenue, a distance of 19.00 feet to the Westerly line of Mt. Vernon Avenue; thence (3) North 27 degrees 28 minutes 00 seconds West, in and along the Westerly line of Mt. Vernon Avenue, a distance of 15.15 feet; thence (4) North 62 degrees 32 minutes 00 seconds East, parallel with Pacific Avenue and crossing Mt. Vernon Avenue, a distance of 19.00 feet to the Easterly line of Mt. Vernon Avenue and the point and place of BEGINNING. BEING an area above the horizontal plane of Mt. Vernon Avenue between elevation 50.00 and elevation 70.00, said elevations in reference to U.S.C. and G.S. Datum (elevation 0.00 = mean sea level). BEING KNOW AS Lot 19 in Block 49, as shown on the Tax Map of the City of Atlantic City. PARCEL B BEGINNING at a point in the Easterly line of Mt. Vernon Avenue (19 feet wide), said point being distant 432.00 feet South of the Southerly line of Pacific Avenue (60 feet wide); and extending from said beginning point the following courses and distances: (1) South 27 degrees 28 minutes 00 seconds East, in and along the Westerly line of Mt. Vernon Avenue, a distance of 18.00 feet; thence (2) South 62 degrees 32 minutes 00 seconds West, parallel with Pacific Avenue and crossing Mt. Vernon Avenue, a distance of 19.00 feet to the Westerly line of Mt. Vernon Avenue; thence (3) North 27 degrees 28 minutes 00 seconds West, in and along the Westerly line of Mt. Vernon Avenue, a distance of 18.00 feet; thence (4) North 62 degrees 32 minutes 00 seconds East, parallel with Pacific Avenue and crossing Mt. Vernon Avenue, a distance of 19.00 feet to the Easterly line of Mt. Vernon Avenue and the point and place of BEGINNING. BEING an area above the horizontal plane of Mt. Vernon Avenue between elevation 30.00 feet and elevation 50.00, said elevations in reference to U.S.C. and G.S. Datum (Elevation 0.00 = mean sea level). BEING KNOW AS Lot 20 in Block 49, as shown on the Tax Map of the City of Atlantic City. PARCEL C: BEGINNING at a point in the Easterly line of Illinois Avenue, now known as Dr. Martin Luther King Boulevard (50 feet wide), said point being distant 365.50 feet South of the Southerly line of Pacific Avenue (60 feet wide); and extending from said beginning point, the following courses and distances: (1) South 27 degrees 28 minutes 00 seconds East, in and along the Easterly line of Illinois Avenue, a distance of 15.50 feet; thence (2) South 62 degrees 32 minutes 00 seconds West, parallel with Pacific Avenue and crossing Illinois Avenue, a distance of 50.00 feet to the Westerly line of Illinois Avenue; thence (3) North 27 degrees 28 minutes 00 seconds West, in and along the Westerly line of Illinois Avenue, a distance of 15.50 feet; thence (4) North 62 degrees 32 minutes 00 seconds East, parallel with Pacific Avenue and crossing Illinois Avenue, a distance of 50.00 feet to the Easterly Line of Illinois Avenue and the point and place of BEGINNING. BEING an area above the horizontal plane of Illinois Avenue between elevation 50.00 and elevation 70.00, said elevations in reference to U.S.C. and G.S. Datum (Elevation 0.00 = mean sea level). BEING KNOWN AS Lot 19 in Block 47, as shown on the Tax Map of the City of Atlantic City. Illinois Avenue now known as Dr. Martin Luther King Boulevard. SCHEDULE A-2 Office Land BEGINNING at a point in the Westerly line of Kentucky Avenue (50 feet wide), distant 441.40 feet South of the Southerly line of Pacific Avenue (60 feet wide), as measured in and along the aforesaid Westerly line of Kentucky Avenue, said beginning point being in the division line between Lots 119.01 and 119.02 in Block 26 as shown on plan of minor subdivision prepared by Dennis E. Duffy Associates, Project No. 3361, dated September 26, 1985 and filed February 11, 1986, filed Map #2358, and extending from said beginning point; thence (1) South 27 degrees 28 minutes 00 seconds East, in and along the aforesaid Westerly line of Kentucky Avenue, a distance of 108.60 feet to a point in the Northerly line of Lot 13 in said Block 49; thence (2) South 62 degrees 32 minutes 00 seconds West, in and along the same and parallel with Pacific Avenue, a distance of 150.00 feet to a corner common to Lots 11, 12 and 13 in said Block 49; thence (3) North 27 degrees 28 minutes 00 seconds West, in and along the Easterly line of Lot 12 and parallel with Kentucky Avenue, a distance of 50.00 feet to the Northeasterly corner of said Lot 12; thence (4) South 62 degrees 32 minutes 00 seconds West, in and along the Northerly line of said Lot 12 and parallel with Pacific Avenue, a distance of 30.00 feet to a point in the Easterly line of Mount Vernon Avenue (19 feet wide); thence (5) North 27 degrees 28 minutes 00 seconds West, in and along same, a distance of 46.85 feet to a point in the aforesaid division line between Lots 11 and 10; thence (6) North 62 degrees 32 minutes 00 seconds East, in and along same and parallel with Pacific Avenue, a distance of 133.40 feet to a point; thence (7) North 27 degrees 28 minutes 00 seconds West, continuing in and along the said division line and parallel with Kentucky Avenue, a distance of 10.00 feet to a point; thence (8) North 62 degrees 32 minutes 00 seconds East, still in and along the said division line and parallel with Pacific Avenue, a distance of 16.60 feet to a point; thence (9) North 27 degrees 28 minutes 00 seconds West, still in and along the said division line and parallel with Kentucky Avenue, a distance of 0.75 feet to a point; thence (10) North 62 degrees 32 minutes 00 seconds East, still in and along the said division line and parallel with Pacific Avenue, a distance of 26.00 feet to a point; thence (11) North 27 degrees 28 minutes 00 seconds West, still in and along the said division line and parallel with Kentucky Avenue, a distance of 1.00 feet to a point; thence (12) North 62 degrees 32 minutes 00 seconds East, still in and along the said division line and parallel with Pacific Avenue, a distance of 4.00 feet to a point in the aforesaid Westerly line of Kentucky Avenue and the point and place of BEGINNING. BEING Lot 119.02 in Block 26 as shown on plan of minor subdivision prepared by Dennis E. Duffy Associates, dated September 26, 1985, Project No. 3361, filed in the Atlantic County Clerk's Office on February 11, 1986, filed Map #2358. ALSO BEING KNOWN AS Lot 11 in Block 49, formerly known as Lot 119.02 in Block 26, as shown on the Tax Map of the City of Atlantic City. SCHEDULE A-3 Expansion Land Tract # 1 ALL THAT CERTAIN LOT, tract or parcel of land and premises situate, lying and being in the City of Atlantic City, County of Atlantic and State of New Jersey, bounded and described as follows: BEGINNING at a point in the Easterly line of Illinois Avenue (50' wide), distant 200.00' South of the Southerly line of Pacific Avenue (60'wide), when measured in and along the said Easterly line of Illinois Avenue, and extending from said beginning point; thence (1) North 62 degrees 32 minutes 00 seconds East, parallel with Pacific Avenue, a distance of 151.00' to a point in the Westerly line of Mount Vernon Avenue (19' wide); thence (2) South 27 degrees 28 minutes 00 seconds East, in and along the same, a distance of 45.00' to a point; thence (3) South 62 degrees 32 minutes 00 seconds West, parallel with Pacific Avenue, a distance of 151.00' to a point in the Easterly line of Illinois Avenue; thence (4) North 27 degrees 28 minutes 00 seconds West, in and along same, a distance of 45.00' to the point and place of BEGINNING. BEING KNOWN AS Lot 8 in Block 48, formerly known as Lot 117 in Block 26, as shown on the Tax Map of the City of Atlantic City. Illinois Avenue now known as Dr. Martin Luther King Boulevard. And subject to Ordinance No. 1994-95 of the City of Atlantic City. Tract # 2 All that certain Land and Premises, Tract or Parcel, situate in the City of Atlantic City, County of Atlantic County and State of New Jersey, bounded and described as follows: Beginning in the Northwesterly Line of Pacific Avenue (60 Ft. Wide) at a point that is 150.75 Feet Northeastwardly of the Northeasterly Line of Indiana Avenue (50 Ft. Wide) and extending thence by N.J.P.C.S. MERIDIAN: (1) North 27 degrees 40 minutes 05 seconds West, at right angles to Pacific avenue, 150.00 Feet; thence (2) North 62 degrees 19 minutes 55 seconds East, parallel with Pacific Avenue, 50.00 Feet; thence (3) South 27 degrees 40 minutes 05 seconds East, at right angles to Pacific Avenue, 150.00 Feet to the first mentioned Northwesterly Line of Pacific Avenue; thence (4) South 62 degrees 19 minutes 55 seconds West, along said Northwesterly Line of Pacific Avenue, 50.00 Feet to the POINT AND PLACE OF BEGINNING. Being known as Lot 29, Block 156, formerly Lot 27, Block 33, on the Tax Map of the City of Atlantic City. Tract # 3 ALL THAT CERTAIN LOT, tract or parcel of land and premises situate, lying and being in the CITY OF ATLANTIC CITY, County of ATLANTIC and State of New Jersey, bounded and described as follows: BEGINNING in the Southeasterly line of Pacific Avenue (60 feet wide) at a point that is 50.75 feet Southwestwardly of the Southwesterly line of Dr. Martin Luther King Jr. Boulevard (50 feet wide) and extending thence by N.J.P.C.S. MERIDIAN: (1) South 27 Degrees 40 minutes 05 seconds East, parallel with Dr. Martin Luther King Jr. Boulevard, 100.00 feet; thence (2) South 62 degrees 19 minutes 55 seconds West, parallel with Pacific Avenue, 50.00 feet; thence (3) North 27 degrees 40 minutes 05 seconds West, parallel with Dr. Martin Luther King Jr. Boulevard, 100.00 feet to the first mentioned Southeasterly line of Pacific Avenue; thence (4) North 62 degrees 19 minutes 55 seconds East, along said Southeasterly line of Pacific Avenue, 50.00 feet to the POINT AND PLACE OF BEGINNING. BEING Lot 7 in Block 47, formerly known as Lot 14 in Block 30, as shown on the Tax Map of the City of Atlantic City. Tract # 4 ALL THAT CERTAIN LOT, tract or parcel of land and premises situate, lying and being in the CITY of ATLANTIC CITY County of ATLANTIC and State of New Jersey, bounded and described as follows: TRACT A BEGINNING at a point in the Southeasterly line of Pacific Avenue (60 feet wide), said point being distant 100.75 feet Southwestwardly from the intersection of the said line of Pacific Avenue with the Southwesterly line of Illinois Avenue (50 feet wide), said point being corner to lands of the former White Tower; thence (1) Southwestwardly along said Pacific Avenue a distance of 100 feet to corner of lands formerly of the Mid Town Motor Inn, said point being distant 150 feet Northeastwardly from the Northeasterly line of Indiana Avenue; thence (2) Southeastwardly parallel with Indiana Avenue (60 feet wide) a distance of 86 feet to a point; thence (3) Northeastwardly parallel with Pacific Avenue a distance of 50 feet to a point; thence (4) Southeastwardly parallel with Illinois Avenue a distance of 114 feet to a point; thence (5) Northeastwardly parallel with Pacific Avenue a distance of 150.75 feet to the Southwesterly line of Illinois Avenue; thence (6) Northwestwardly along the Southwesterly line of Illinois Avenue a distance of 100 feet to a point; thence (7) Southwestwardly parallel with Pacific Avenue a distance of 100.75 feet to a point; thence (8) Northwestwardly parallel with Illinois Avenue a distance of 100 feet to the Southwesterly line of Pacific Avenue to the point and place of BEGINNING. The above description is in accordance with a survey drawn by Arthur W. Ponzio Co. and Associates dated November 7, 1984 and revised November 23, 1984, January 7, 1985, July 11, 1985, July 12, 1985 and August 5, 1985. BEING KNOWN AS Lots 4, 5, 6, 9 and 10 in Block 47, formerly known as Lots 2, 3, 16, 42 and 19 in Block 30, on the Tax Map of the City of Atlantic City. Illinois Avenue now known as Dr. Martin Luther King Boulevard. TRACT B BEGINNING at the intersection of the Southeasterly line of Pacific Avenue (60 feet wide) with the Northeasterly line of Indiana Avenue (60 feet wide); thence (1) Northeastwardly along the Southeasterly line of Pacific Avenue a distance of 150 to a point corner to lands formerly of the Bala Motel; thence (2) Southeastwardly along said lands and extensions thereof and parallel with Indiana Avenue a distance of 150 feet to a point; thence (3) Southwestwardly parallel with Pacific Avenue a distance of 150 feet to the Northeasterly line of Indiana Avenue; thence (4) Northwestwardly along the Northeasterly line of Indiana Avenue a distance of 150 feet to the point and place of BEGINNING. The above description is in accordance with a survey drawn by Arthur W. Ponzio Co. and Associates dated November 7, 1984 and revised July 11, 1985, August 5, 1985 and August 6, 1985. BEING Lots 1, 2 and 3 in Block 47, formerly known as Lots 5, 6 and 7 in Block 30, as shown on the Tax Map of the City of Atlantic City. TRACT C BEGINNING at a point on the Northerly sideline of Pacific Avenue, said point being 100.75 feet Northeast from the intersection of the Northerly sideline of Pacific Avenue and the Easterly sideline of Indiana Avenue (said point also being 250.00 feet West of Illinois Avenue) and running thence; (1) North 27 degrees 28 minutes 00 seconds West 150.00 feet to a point; thence (2) South 62 degrees 32 minutes 00 seconds West 0.75 feet to a point; thence (3) North 27 degrees 28 minutes 00 seconds West parallel with Indiana Avenue, 25 feet to a point; thence (4) North 62 degrees 32 minutes 00 seconds East 50.00 feet to a point; thence (5) South 27 degrees 28 minutes 00 seconds East 25.00 feet to a point; thence (6) North 62 degrees 32 minutes 00 seconds East 0.75 feet to a point; thence (7) South 27 degrees 28 minutes 00 seconds East 150.00 feet to the point; thence (8) South 62 degrees 32 minutes 00 seconds West 50.00 feet to a point and the place of BEGINNING. The above description is in accordance with a survey drawn by Arthur W. Ponzio Co. and Associates dated November 7, 1984 and revised July 11, 1985, July 12, 1985 and August 5, 1985. BEING KNOWN AS Lot 31 in Block 156, formerly known as Lot 73 in Block 33, as shown on the Tax Map of the City of Atlantic City. Illinois Avenue now known as Dr. Martin Luther King Boulevard. TRACT # 5 ALL THAT CERTAIN LOT, tract or parcel of land and premises situate, lying and being in the City of Atlantic City, County of Atlantic and State of New Jersey, bounded and described as follows: BEGINNING in the Northeasterly line of Indiana Avenue (60 feet wide) at a point 150 feet Southeastwardly of the Southeasterly line of Pacific Avenue (60 feet wide); and extending thence (1) North 62 degrees 32 minutes East, parallel with Pacific Avenue, 155 feet; thence (2) South 27 degrees 28 minutes East, parallel with Indiana Avenue, 50.10 feet; thence (3) South 62 degrees 32 minutes West, parallel with Pacific Avenue 155 feet to the first mentioned Northeasterly line of Indiana Avenue; thence (4) North 27 degrees 28 minutes West, along same, 50.10 feet to the point and place of BEGINNING. BEING KNOWN AS Lot 11 in Block 47 as shown on the current tax map of the City of Atlantic City. SCHEDULE A-4 Easement EASEMENT I DESCRIPTION FOR EASEMENT FOR THE PEOPLEMOVER SYSTEM TOGETHER WITH SUPPORTING COLUMNS ON INDIANA AVENUE. BEGINNING at a point in the Westerly line of Indiana Avenue (60 feet wide), said point being distant 342.00 feet South of the Southerly line of Pacific Avenue (60 feet wide), and extending from said beginning point; thence (1) North 62 degrees 32 minutes 00 seconds East, parallel with Pacific Avenue a distance of 10.00 feet; thence (2) South 27 degrees 28 minutes 00 seconds East, parallel with Indiana Avenue a distance of 94.00 feet; thence (3) North 62 degrees 32 minutes 00 seconds East, parallel with Pacific Avenue a distance of 50.00 feet to the Easterly line of Indiana Avenue; thence (4) South 27 degrees 28 minutes 00 seconds East, in and along the Easterly line of Indiana Avenue, a distance of 30.00 feet: thence (5) South 62 degrees 32 minutes 00 seconds West, parallel with Pacific Avenue a distance of 50.00 feet; thence (6) South 27 degrees 28 minutes 00 seconds East, parallel with Indiana Avenue a distance of 498.90 feet; thence (7) South 62 degrees 32 minutes 00 seconds West, parallel with Pacific Avenue a distance of 10.00 feet to the Westerly line of Indiana Avenue; thence (8) North 27 degrees 28 minutes 00 seconds West, in and along the Westerly line of Indiana Avenue, a distance of 622.90 feet to the point and place of BEGINNING. The above described Easement is located over and along the right of way of Indiana Avenue. It is understood that the above description is for an elevated peoplemover system, together with supporting columns on Indiana Avenue and for an elevated pedestrian passageway or bridge connecting the peoplemover system to the Claridge and to the Sands respectively. It is further understood that the bottom of said easement shall be located at elevation 20, mean sea level datum and the top of said easement shall be at elevation 45.0. EASEMENT II DESCRIPTION OF A PEOPLEMOVER SYSTEM ENTRANCE AND MUSEUM AT THE BOARDWALK END OF INDIANA AVENUE. ALL THAT CERTAIN LOT, tract, or parcel of land and premises situate, lying, and being in the city of Atlantic City, County of Atlantic, and State of New Jersey, bounded and described as follows: BEGINNING at a point distant 946.90 feet South of the Southerly line of Pacific Avenue (60 feet wide) and 26.00 feet West of the Westerly line of Indiana Avenue (60 feet wide), when measured at tight angles to said avenues respectively, and extending from said beginning point; thence (1) North 62 degrees 32 minutes 00 seconds East, parallel with Pacific Avenue a distance of 62.00 feet; thence (2) South 27 degrees 28 minutes 00 seconds East, parallel with Indiana Avenue a distance of 59.37 feet to the Inland or Interior Line of Public Park; thence (3) South 77 degrees 07 minutes 07 seconds West, in and along the Inland or Interior Line of Public Park, a distance of 64.06 feet; thence (4) North 27 degrees 28 minutes 00 seconds West, parallel with Indiana Avenue a distance of 43.23 feet to the point and place of BEGINNING. The above described easement is located partly in the right of way of Indiana Avenue and partly on Lot 5, Block 46 as shown on the Tax Map of the City of Atlantic City. It is understood that the above description is for the Museum and Peoplemover System entrance area at the Boardwalk end of Indiana Avenue. SCHEDULE A-5 Leasehold Estate - Madison House Lease ALL THAT following lands located in the City of Atlantic City, County of Atlantic and State of New Jersey, bounded and described as follows: BEGINNING at a point in the Easterly line of Illinois Avenue 245 feet South 27 degrees 28 minutes East from the Southerly line of Pacific Avenue; and extending thence (1) North 62 degrees 32 minutes East, parallel with Pacific Avenue 151 feet to the Westerly line of Mount Vernon Avenue; thence (2) South 27 degrees 28 minutes East, in and along the Westerly line of Mount Vernon Avenue 105 feet; thence (3) South 62 degrees 32 minutes West, parallel with Pacific Avenue 151 feet to the Easterly line of Illinois Avenue; thence (4) North 27 degrees 28 minutes West, in and along the Easterly line of Illinois Avenue 105 feet to the point and place of beginning. BEING Lot 9, Block 48 on the Official Tax Map of Atlantic City. Schedule B Permitted Encumbrances 1. Permitted Liens as defined in the Indenture. 2. All those certain encumbrances listed on Schedule B - Section II of that certain ALTA Loan Policy No. 1021671060, issued by the Title Company of Jersey, as agent for Stewart Title Guaranty Company, dated June 22, 2004. 3. The terms of a lease, license or management agreement(s) with an energy management company(s), supplier(s), or intermediary(s) related thereto now or hereafter entered into concerning or with respect to the supply and/or management of utility services and/or the operation of existing or newly supplied equipment at the property, including, but not limited to heating, ventilation, and air-conditioning and energy production related equipment. 4. That certain unrecorded Lease Agreement for Lot 29 in Block 156 between Assignor as Landlord, and T&M Parking, Inc., as Tenant, dated March 20, 1996, having a month-to-month term. 5. That certain License Agreement by and between Assignor and Eva Daush, d/b/a Sansations Hair Salon, dated April 28, 1999, and amended March 15, 2000, for a term to expire September 15, 2000, and to be renewed upon substantially the same terms. 6. That certain License Agreement by and between Assignor and 21st Century Hot Dogs, LLC, dated May 16, 2003, for a term of three (3) years. SCHEDULE 1 1. Brighton Park Improvements Agreement between Assignor and the Claridge at Park Place, Inc., dated November 5, 1987, as amended April 5, 2000. 2. Lease Agreement for Lot 29 in Block 156 between Assignor, as Landlord, and T&M Parking, Inc., as Tenant, dated March 20, 1996, having a month-to-month term. 3. License Agreement by and between Assignor and Eva Dausch, d/b/a Sansations Hair Salon, dated April 228, 1999, and amended March 15, 2000, for a term to expire September 15, 2000, and to be renewed upon substantially the same terms. 4. That certain License Agreement by and between Assignor and 21st Century Hot Dogs, LLC, dated May 16, 2003, for a term of three (3) years. EX-10.4 10 file010.txt MORTGAGE FIXTURE FILING AND SECURITY AGREEMENT This Mortgage was prepared by and after recording should be returned to: Mitchell S. Berkey, Esq. Wolff & Samson PC One Boland Drive West Orange, New Jersey 07052 MORTGAGE, FIXTURE FILING AND SECURITY AGREEMENT ----------------------------------------------- This MORTGAGE, FIXTURE FILING AND SECURITY AGREEMENT (this "Mortgage"), made this 22nd day of July, 2004 by ACE GAMING, LLC, a limited liability company duly formed and existing under the laws of the State of New Jersey and having its principal place of business at the Sands Hotel and Casino, Indiana Avenue and Brighton Park, Atlantic City, New Jersey 08401 (the "Mortgagor"), in favor of WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association having its corporate trust office at Sixth and Marquette, Minneapolis, Minnesota 55479, as Trustee (the "Mortgagee") under the Indenture described below on its own behalf and on behalf of the holders from time to time of the Securities referred to below (the "Holders"). W I T N E S S E T H WHEREAS, the Mortgagor is the owner of a fee simple interest in certain land and air spaces situated in the City of Atlantic City, County of Atlantic, State of New Jersey ("Atlantic City"), being more particularly described on Schedule A-1 attached hereto and by this reference made a part hereof (the "Casino Land") and the improvements now or hereafter constructed on the Casino Land, a portion of which constitute the Sands Hotel and Casino and Parking Garage (the "Sands"); WHEREAS, the Mortgagor is the owner of a fee simple interest in certain land and air spaces situated in Atlantic City, being more particularly described on Schedule A-2 attached hereto and by this reference made a part hereof (the "Office Land") and the improvements now or hereafter constructed on the Office Land; WHEREAS, the Mortgagor is the owner of certain land situated in the City of Atlantic City, County of Atlantic, State of New Jersey, being more particularly described on Schedule A-3 attached hereto and by this reference made a part hereof (the "Expansion Land" and the improvements now or hereafter constructed on the Expansion Land (the Casino Land, the Office Land, and the Expansion Land being collectively referred to herein as the "Land"); WHEREAS, the Mortgagor is the owner of an easement interest in the parcels of real property situated in Atlantic City more particularly described on Schedule A-4 attached hereto and by this reference made a part hereof (the "Easement") and the improvements now or hereafter constructed on the Easement; WHEREAS, the Easement was granted to the Mortgagor and the Claridge Casino Hotel pursuant to that certain Ordinance No. 103 of Atlantic City dated October 7, 1987 and was recorded January 29, 1993 in the Atlantic County, New Jersey Clerk's Office in Deed Book 5463, Page 228 (the "Easement Ordinance"); WHEREAS, the Mortgagor is the sole owner and holder of the lessee's interest (the "Leasehold Estate") under the Lease dated December 18, 2000 originally between Madison House Group, L.P., as lessor, and Greate Bay Hotel and Casino, Inc., as lessee (the "Madison House Lease"), with respect to certain property located in the City of Atlantic City, County of Atlantic and State of New Jersey commonly known as 125 Dr. Martin Luther King Boulevard and more particularly described on Schedule A-5 attached hereto and by this reference made a part hereof. WHEREAS, pursuant to an Indenture, dated as of the date hereof (as the same may hereafter be amended, supplemented or otherwise modified, the "Indenture"; capitalized terms not otherwise defined herein are used herein as defined therein), among the Mortgagor, the Mortgagee and Atlantic Coast Entertainment Holdings, Inc., a Delaware corporation (the "Company"), the Company is issuing, on the date hereof, up to $110 million of 3% First Mortgage Notes Due 2008 (the "First Mortgage Notes" or the "Securities"); WHEREAS, this Mortgage is being executed and delivered pursuant to the terms and conditions set forth in the Indenture and is entitled to the benefits thereof; WHEREAS, the Mortgagor has guaranteed the punctual payment (including applicable notice and/or grace periods) of the principal of and any interest on the Securities, whether at maturity, by acceleration or otherwise, and payment and performance by the Company, and the Mortgagor of their other respective obligations (including the payment of fees and expenses) under the Indenture and with respect to the Securities pursuant to the guarantee contained in Article 12 of the Indenture (as the same may hereafter be amended, supplemented or otherwise modified from time to time, the "Guarantee"); and WHEREAS, it is a condition precedent to the issuance of the Securities that the obligations of Mortgagor under the Guarantee be secured by, among other things, this Mortgage. NOW THEREFORE, in consideration of the premises and for other good and valuable consideration, receipt of which is hereby acknowledged, the Mortgagor agrees as follows: TO SECURE: The payment and performance by the Mortgagor of all of its obligations, covenants and duties, including, but not limited to, obligations to make payment of all principal, interest (including any interest that accrues after the filing of a petition of the type referred to in Sections 501(vi) and 501(vii) of the Indenture) fees, expenses and other amounts payable under the Guarantee, this Mortgage, the Indenture and any other Security Document, including all amounts that constitute part of such obligations and would be owed by the Company or the Mortgagor to 2 the Mortgagee but for the fact that they are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving the Company or the Mortgagor, (all of such obligations, covenants and duties referred to in this paragraph being called, collectively, the "Liabilities"). The Mortgagor hereby grants to the Mortgagee on behalf of the Mortgagee and of the Holders, a security interest in, and the Mortgagor hereby mortgages to the Mortgagee on its own behalf and on behalf of the Holders, all of its estate, right, title and interest in, to and under, or derived from, the following property: The Land, together with all right, title and interest of the Mortgagor now owned or hereafter acquired, if any, in and to the streets, the land lying in the bed of any streets, roads, avenues, alleys, passages and sidewalks; and all reversionary rights with respect to the vacation of said streets, roads, avenues, alleys, passages and sidewalks, open or proposed, in front of, adjoining or abutting the Land to the center line thereof and any air spaces thereover and all and singular the reversions or remainders in and to the Land and the tenements, hereditaments, easements (in gross and/or appurtenant), rights-of-way or use, rights (including alley, drainage, crop, timber, agricultural, horticultural, mineral, water, ditch, reservoir, oil and gas rights), privileges, royalties and appurtenances to the Land, now or hereafter belonging or in anywise appertaining thereto, including any such estate, right, title, interest in, to or under any agreement or right granting, conveying or creating, for the benefit of the Land, any easement, right or license in any way affecting the said property and other property and in, to or under any streets, ways, alleys, vaults, gores or strips of land adjoining the Land and or any parcel thereof, or in or to the air space over the Land, and all rights of ingress and egress by motor vehicles to parking facilities on or within the Land, and all claims or demands of the Mortgagor, either at law or in equity, in possession or expectancy, of, in or to the same; TOGETHER WITH all right, title and interest of the Mortgagor to the Easement, any interest in any fee, greater or lesser title to the Easement that Mortgagor may own or hereafter acquire and all credits, deposits, options, privileges and rights of Mortgagor under the Easement and the Easement Ordinance (including all rights of use, occupancy and enjoyment) and under any amendments, supplements, extensions, renewals, restatements, replacements and modifications thereof (including, without limitation, (i) the right to give consents, (ii) the right to receive moneys payable to Mortgagor, (iii) the right, if any, to purchase the real property subject to the Easement and (iv) the right to terminate or modify the Easement); TOGETHER WITH all right, tittle and interest of the Mortgagor in and to the Leasehold Estate; TOGETHER WITH all right, title and interest of the Mortgagor to the interests granted to the Mortgagor by Atlantic City pursuant to that certain Ordinance of Atlantic City of Atlantic City, New Jersey, No. 70, dated August 1, 1986; TOGETHER WITH all buildings, structures, facilities and other improvements now or hereafter located on the Land or the Easement or subject to the Leasehold Estate, including, without limitation, the Sands and all building material, building equipment, supplies and fixtures of every kind and nature now or hereafter located on the Land or the Easement or subject to the 3 Leasehold Estate or attached to, or contained in any such buildings, structures or facilities including, without limitation, all of the same which may be or become a part of the Sands, and all additions thereto and betterments, renewals, substitutions and replacements thereof, in each case only to the extent the same is both: (i) owned or leased by the Mortgagor or in which the Mortgagor has or shall acquire an interest and (ii) now or hereafter located on the Land or the Easement or subject to the Leasehold Estate (all of the foregoing hereinafter collectively called the "Improvements") (the Land, the Easement and the Leasehold Estate, together with the Improvements are hereinafter collectively referred to as the "Premises"); TOGETHER WITH all machinery, apparatus, equipment, materials, fittings, fixtures and all appurtenances and additions thereto and betterments, renewals, substitutions and replacements thereof, owned or leased by the Mortgagor or in which the Mortgagor has or shall acquire an interest, to the extent that the same are now or hereafter located on, attached to or contained in the Premises or placed on any part thereof, though not attached thereto (including, without limitation, the elevated, enclosed and motorized pedestrian walkway currently constructed upon the Easement (the "People-Mover") and the equipment, fittings, materials and all appurtenances and additions thereto and betterments, renewals, substitutions, replacements, proceeds and products thereof, which are incorporated in, or a part of or are necessary for the operation of the People-Mover (all of the foregoing; including the People-Mover, hereinafter collectively called the "Fixtures"; the Premises and the Fixtures together being collectively referred to as the "Mortgaged Premises"), including, without limitation, any of the foregoing that constitute heating, lighting, plumbing, ventilating, air conditioning, refrigerating, gas, steam, electrical, incinerating and/or compacting plants, systems, fixtures and equipment, security systems, elevators, escalators, hoists, cleaning systems, call systems, sprinkler systems and other fire prevention and extinguishing apparatus and materials, loading and unloading apparatus, landscaping, motors, machinery, pipes, ducts, conduits, dynamos, engines, compressors, generators, boilers, furnaces, pumps, tanks, appliances, equipment, shops, girders, beams, fittings and fixtures; the Mortgagee shall have, in addition to all rights and remedies provided in the Indenture, the Security Agreement, dated as of the date hereof, made by the Mortgagor to the Mortgagee (the "Security Agreement"), the Assignment of Leases, dated as of the date hereof, made by the Mortgagor to the Mortgagee, this Mortgage and any other agreements, commitments and undertakings made by the Mortgagor to the Mortgagee, all of the rights and remedies of a "secured party" under said Uniform Commercial Code. If the Lien of this Mortgage is subject to a security interest covering any property described in this paragraph, then all of the right, title and interest of the Mortgagor in and to any and all such property is hereby assigned to the Mortgagee, together with the benefits of all deposits and payments now or hereafter made thereon by or on behalf of the Mortgagor; TOGETHER WITH all of the Mortgagor's interest in the leases, subleases, lettings and licenses of, and all other contracts and agreements affecting, the Land, the Easement, the Leasehold Estate, the Improvements and the Fixtures, or any part thereof, now or hereafter entered into, and all modifications, supplements, additions, extensions, renewals and replacements thereof, and all right, title and interest of the Mortgagor thereunder, including cash and securities deposited thereunder as security, the right to receive and collect the rents, additional rents, increases in rents, security deposits, advance rents, income, proceeds, earnings, revenues, issues and profits payable thereunder and the rights to enforce, whether at law or in equity or by any other means, all provisions thereof, and any other benefits derived or to be 4 derived therefrom, including, without limitation, any security deposits made by the Space Tenants (as hereinafter defined), and the right to apply the same to the payment of the Liabilities subject to the terms and provisions of this Mortgage; TOGETHER WITH all other property, of every kind and nature, which may from time to time be subjected to the Lien hereof by the Mortgagor through a supplement to this Mortgage or by anyone on its behalf or with its consent, or which may come into the possession of or be subject to the control of the Mortgagee pursuant to this Mortgage; TOGETHER WITH all unearned premiums, accrued, accruing or to accrue under insurance policies now or hereafter obtained by the Mortgagor with respect to the Mortgaged Premises, and the Mortgagor's interest in and to all proceeds of the conversion and the interest payable thereon, voluntary or involuntary, of the Mortgaged Premises or any part thereof, to the extent the same are property of the Mortgagor, into cash or liquidated claims, including without limitation, but subject to the provisions of this Mortgage and the Indenture, proceeds of casualty insurance, title insurance or other insurance maintained on the Premises and the Fixtures (excluding the proceeds of all worker's compensation insurance and personal or general liability insurance), and the right to collect and receive the same and all awards or payments, including interest thereon, hereafter made to the Mortgagor for the taking by eminent domain of the whole or any part of the Land, Easement, the Leasehold Estate or Mortgaged Premises or the use thereof, or any easement therein, including any awards or payments for changes of grade of streets or any other injury to or decrease in the value of the Land, Easement or Mortgaged Premises, which said awards and payments, subject to the terms of this Mortgage and the Indenture, are hereby assigned to the Mortgagee on its own behalf and on behalf of the Holders, who is hereby authorized, subject to the terms of this Mortgage and of the Indenture, to collect and receive the proceeds thereof and to give proper receipts and acquittances therefor, and to apply the same toward the payment of the Liabilities, at any time secured hereby, notwithstanding the fact that the amount thereof may not then be due and payable and toward the reasonable counsel fees, costs and disbursements incurred by the Mortgagee in connection with the collection of such award or payments, and any and all refunds of real estate taxes which may become due to the Mortgagor and any and all deposits by the Mortgagor with providers of utilities and other services to the Premises; and the Mortgagor hereby agrees, upon request, to make, execute and deliver any and all assignments and other instruments sufficient for the purpose of assigning said awards or payments to the Mortgagee on its own behalf and on behalf of the Holders, free, clear and discharged of any encumbrances (other than encumbrances permitted hereunder or under the Indenture) of any kind or nature whatsoever; TOGETHER WITH all of the Mortgagor's right, title and interest in all proceeds, both cash and non cash, of the foregoing which may be sold or otherwise disposed of pursuant to the terms hereof; TOGETHER WITH any and all monies now or hereafter on deposit for the payment of real estate taxes or special assessments against the Mortgaged Premises or for the payment of premiums on fire or other property insurance covering the Mortgaged Property (hereinafter defined). 5 All of the foregoing real and personal property and rights and interests in property and awards are herein collectively referred to as the "Mortgaged Property". TO HAVE AND TO HOLD the Mortgaged Property unto the Mortgagee, its successors and assigns, to its and their own proper use, benefit and behalf forever. PROVIDED ALWAYS, and these presents are upon the express condition that, if (i) the outstanding principal of the Securities, and any interest which may become due thereon and any other sums which may become due in connection therewith shall be paid in full in accordance with the terms of the Securities, the Indenture and hereof and if all of the Liabilities shall be performed and paid in full or (ii) the Indenture is otherwise discharged, then these presents and the estate hereby created shall cease, determine and be void and the Mortgagee agrees that at such time, upon the request of the Mortgagor, it shall execute and deliver such documents and take all action as may be reasonably requested by the Mortgagor to be necessary to terminate this Mortgage of record. AND the Mortgagor represents and warrants to and covenants with the Mortgagee on its own behalf and on behalf of the Holders that, to the best of its knowledge, it has and at all times hereafter will have good and marketable fee simple title to the Premises (except that in the case of the Easement, the Mortgagor shall maintain its interest, and in the case of the Leasehold Estate, the Mortgagor shall maintain its leasehold interest) and the Mortgagor covenants that its estate, right, title and interest in and to the Premises is free and clear of all taxes, Liens, and encumbrances whatsoever, except as appears in Schedule B attached hereto and made a part hereof; provided however, that the Mortgager and Mortgagee acknowledge and agree that: (x) all security interest and other rights in the Mortgaged Property and any other Collateral shall be, and hereby are, subject and inferior to any Liens heretofore or hereafter created from time to time in connection with the incurrence of Working Capital Indebtedness; and (y) notwithstanding anything to the contrary hereunder or in the Indenture or in the other Security Documents, the Mortgagor and its subsidiaries may incur Liens and Indebtedness (including, without limitation, Liens on the Mortgaged Property and other Collateral) permitted by the Indenture. In connection with any of the foregoing, Mortgagee will, at the request of Mortgagor, enter into such intercreditor agreements, standstill agreements, subordination agreements and other documents as shall be appropriate under the circumstances for the benefit of the holder of such other Indebtedness or of the superior liens. The Mortgagor further covenants with the Mortgagee on its own behalf and on behalf of the Holders as follows: 1. Payment of Liabilities. As set forth in the Guarantee, the Mortgagor will pay, or cause to be paid, the Liabilities secured by this Mortgage and shall perform all conditions, covenants and obligations on the part of the Mortgagor in accordance with the terms of the Guarantee, the Indenture, the Security Documents and this Mortgage, including, without limitation, applicable notice and grace periods. 6 2. Insurance. 2.1 The Mortgagor shall at its own expense at all times maintain or cause to be maintained on all of the Mortgaged Property and all other personal property subject to the Security Agreement: (x) insurance satisfying the requirements of clauses (c) and (d) below; and (y) property and liability insurance against such risks, in such amounts and in such form, as is usually carried by companies engaged in a business similar to the business conducted by Mortgagor in Atlantic City, New Jersey, provided however, that in no event shall Mortgagor be required to obtain insurance in excess of any of the following: (a) commercial liability insurance (including blanket contractual liability insurance, innkeeper's liability, products liability and elevator liability) covering all claims for bodily injury, including death, or property damage occurring on, in or about the Mortgaged Premises and the adjoining sidewalks and passageways in an amount of not less than $50,000,000 combined single limit as respects bodily injury and property damage in respect of any one occurrence provided that the primary policy, providing liability limits of $1,000,000 per occurrence and $1,000,000 in the aggregate for bodily injury liability and property damage liability, as such limits are defined in standard endorsement L6108 entitled: "Amendment - Limits of Liability (Single Limit) (Individual Coverage Aggregate Limit)", and such insurance may be excess to a $500,000 self-insured retention per occurrence and may be subject to $500,000 combined single limit sublimit for coverage provided for the care, custody and control of property, a $250,000 per loss/aggregate sublimit for Innkeeper's Property Damage Liability, a $250,000 per loss/aggregate sublimit for Hotel Safe Deposit Box Liability, a $250,000 per occurrence limit for real property fire liability, and a $250,000 in the aggregate, a $1,000,000 aggregate limit for personal injury liability, liquor liability, advertising liability and pollution liability; during any period of alterations or improvements in, on or to the Mortgaged Premises, the Mortgagor will cause to have the commercial liability insurance policy endorsed to provide owners and contractors protective liability coverage including completed operations liability coverage or maintain separate policies with respect to such coverage; (b) workers' compensation insurance (including employer's liability insurance) for all employees of the Mortgagor engaged on or with respect to the Mortgaged Property in such amounts as are required by law; (c) physical damage insurance covering the Improvements and Fixtures for loss or damages resulting from the perils of fire, lightning and such other risks and hazards as are provided under the current standard "Extended Coverage Endorsement" and vandalism and malicious mischief coverage for 100% of the full replacement value of the Improvements and Fixtures (excluding footings and foundations) on condition that the policy contains an "agreed amount endorsement" and that no co-insurance provisions would be applicable, provided that the property policy limit may be subject to a total limit of $200,000,000 for all loss arising out of one occurrence subject to a sublimit of $100,000,000 unless the loss is caused by fire, lightning, removal, wind and hail, leakage from fire protective equipment, explosion, smoke, aircraft and vehicles, sonic shock wave, riot, civil commotion and vandalism, molten material, and in which case the $100,000,000 sublimit will not apply, a sublimit of $35,000,000 in the aggregate for loss due to earthquake, a sublimit of $5,000,000 in the aggregate for loss caused by flood, a sublimit of $1,000,000 for property in transit, a sublimit of $1,000,000 on newly acquired property, a sublimit of $105,000,000 for business interruption loss defined to include net profit plus certain continuing expenses except ordinary payroll expenses, a $50,000,000 sublimit for general boiler and machinery coverage, and a maximum deductible of $500,000 for each loss and a 72-hour exclusion for any time element loss; (d) insurance on all Equipment and all Inventory (as such terms are defined in the Security Agreement and included in the "Collateral" therein) against loss 7 or damage by reason of any hazard referred to in subsection (c) and subject to the conditions stated in subsection (c) of this subsection 2.1 in an amount of 100 percent of the full replacement value thereof; (e) insurance against loss of rents/business interruption by reason of any hazard covered under the insurance required under subsections (c) and (d) of this subsection 2.1 in an amount sufficient to avoid any co-insurance penalty, and subject to the conditions stated in subsection (c); and (f) insurance against such other risks of damages, hazards, casualties and contingencies, but only if and only to the extent and in such amounts that insurance against such other risks, hazards, casualties or contingencies shall then be commonly carried by prudent owners and lessees of buildings or improvements in the locality similar in character, construction, use and occupancy to the Improvements, appurtenances, and Fixtures and equipment on or constituting a part of the Mortgaged Property; all such insurance, after providing for costs of collection. The Mortgagor will duly and punctually comply, or cause compliance with, all of the material terms and conditions of any insurance policy covering or applicable to the Mortgaged Property, whether or not expressly required hereunder, all material requirements of the issuer of any such policy, and all orders, rules and other requirements of the National Board of Fire Underwriters (or any body exercising similar functions) binding upon the Mortgagor or applicable to or affecting the Mortgaged Property or any use or condition thereof. The types, terms, conditions, coverages and policy limits of insurance maintained pursuant to this subsection 2.1 may be increased, decreased, amended, supplemented or otherwise modified from time to time to the extent available and at a reasonable cost to reflect what prudent owners and/or lessees of buildings or improvements similar in type and locality to the Mortgaged Property would carry, as certified to the Mortgagee in an Officer's Certificate (as defined herein) of the Mortgagor. 2.2 All insurance required pursuant to subsection 2.1 hereof shall be evidenced by valid and enforceable policies, in form and substance, and issued by and distributed among insurers of recognized responsibility having an A.M. Best Company rating of at least A or B and a financial size category of Class VII or above, and authorized to do business in the State of New Jersey. The originals of all such policies, or certified duplicate copies or certificates thereof (accompanied by photostats of the policies as soon as available), shall be delivered to the Mortgagee concurrently with the execution and delivery of this Mortgage and, thereafter (i) all quotations, synopses and letters of amendment thereto in respect of proposed coverage, as well as definitive insurance binders relating to the renewal or replacement policies, shall be delivered to the Mortgagee as soon as reasonably practicable prior to the expiration of the policy or policies to be renewed or replaced and (ii) all renewal or replacement policies, or certified duplicate copies or certificates thereof (accompanied by photostats of the policies), shall be delivered to the Mortgagee as soon as reasonably practicable after the expiration date of the policy or policies to be renewed or replaced, in each case accompanied by evidence that all premiums currently payable with respect to such policies have been paid in full. 2.3 Except in the case of workers' compensation, general and personal liability and loss of rents/business interruption insurance, all insurance policies at any time required by this Section 2 shall (a) provide as follows: (i) the insureds named therein shall include the Mortgagee on its own behalf and on behalf of the Holders and the Mortgagor, as their respective interests may appear, (ii) all losses payable thereunder in amounts less than or equal to $1,000,000 shall be payable directly to the Mortgagor, (iii) all losses payable thereunder in excess of $1,000,000 shall be payable to the Mortgagee on its own behalf and on behalf of the 8 Holders pursuant to a standard mortgagee clause naming the Mortgagee on its own behalf and on behalf of the Holders, as their interests may appear, with loss payable to the Mortgagee on its own behalf and on behalf of the Holders without contribution, and (iv) all losses thereunder in excess of $10,000,000 shall be adjusted by the Mortgagor with the prior consent of the Mortgagee (which consent shall not be unreasonably withheld); (b) such policies may not be canceled or amended without at least thirty (30) days' prior written notice to the Mortgagee; and (c) no act, omission or negligence of the Mortgagor, or its agents, servants or employees, or of any Space Tenant under any Space Lease (as defined in Section 24.4 hereof) or any of their agents, servants or employees which might otherwise result in a forfeiture of such insurance or any part thereof, shall in any way affect the validity or enforceability of, or the amounts which may be collected under, any of such insurance with respect to the Mortgagee. All losses payable to the Mortgagee pursuant to subsection 2.3(a)(iii) shall be assigned and paid directly to the Mortgagee for deposit into the Collateral Account to be held and applied in accordance with Sections 1018 and 1404 of the Indenture and Section 9.3 hereof. The policy or policies of insurance of the character described in subsections (a), (b), (c), (d), (e) and (f) of subsection 2.1 hereof may consist of blanket policies insuring the Mortgaged Premises and other property of the Mortgagor; provided that such policy or policies shall set forth the amount of insurance in force thereunder applicable to the Mortgaged Premises and any sublimits in such blanket policy applicable to the Mortgaged Premises, which amounts shall be not less than the amounts required pursuant to this Section 2 and shall otherwise comply with the provisions of this Section 2 and shall afford the same protections to the Mortgagee as would be provided by policies individually applicable to the Mortgaged Premises, provided that if a portion of such policy covers the insurance to be given in Section 2, the total coverage afforded under such portion shall be on an "occurrence" basis, and provided further that if the Mortgagor converts any insurance policy from an "occurrence" to a "claims" basis (or vice versa), the Mortgagor shall cause the risk to be covered by such policy to be continuously insured against notwithstanding such change. If, notwithstanding the provisions of subsection 2.3(a)(iii) hereof, any insurance proceeds in excess of $1,000,000 are made payable to the Mortgagor, rather than to the Mortgagee as required, the Mortgagor shall promptly deliver such proceeds, in the form received but with any necessary endorsements, to the Mortgagee and the Mortgagor hereby irrevocably appoints the Mortgagee as its attorney-in-fact, coupled with an interest, to endorse and/or transfer any such payment to the name of the Mortgagee on its own behalf and on behalf of the Holders. All proceeds of the insurance shall be held and disbursed in accordance with Sections 1018 and 1404 of the Indenture and Section 9.3 hereof. 2.4 If the Mortgagee on its own behalf and on behalf of the Holders shall by any manner acquire the title or estate of the Mortgagor in or to any portion of the Mortgaged Premises, it shall thereupon, to the extent such insurance policies are not blanket insurance policies of the Mortgagor, become the sole and absolute owner of all insurance policies held by or required hereunder to be delivered to the Mortgagee, affecting such portion, with the sole right to collect and retain all unearned premiums thereon, and the Mortgagor shall be entitled only to a credit, in reduction of the then outstanding Liabilities secured hereby, in the amount of any cancellation refund actually received by the Mortgagee. To the extent applicable the Mortgagor agrees, immediately upon demand, to execute and deliver such assignments or other authorizations or instruments as may be necessary or desirable to effectuate the foregoing. 9 2.5 In the event that the Mortgagor fails to (i) provide, maintain or keep in force the insurance policies required pursuant to subsection 2.1 hereof or (ii) deliver and furnish to the Mortgagee the original policies of insurance (or certified duplicate copies or certificates thereof, accompanied by photostats of the policies) or definitive binders relating to renewal or replacement policies pursuant to subsection 2.2 hereof prior to the expiration, cancellation or amendment of existing policies, the Mortgagee on its own behalf and on behalf of the Holders may at its sole option upon prior written notice to Mortgagor (but in no event shall the Mortgagee be so obligated) obtain such insurance, and the Mortgagor will pay all premiums thereon promptly upon demand by the Mortgagee, with interest thereon, from the date on which such premiums are paid by the Mortgagee until the Mortgagor shall reimburse the Mortgagee for such amounts, at a rate of interest equal to the prime rate plus 2% per annum from time to time announced by the Mortgagee, and such sums, until paid, shall be secured by this Mortgage. 2.6 The Mortgagor shall not take out separate insurance concurrent in form or contributing in the event of loss with that required to be obtained and maintained under this Section 2. Subject to the foregoing, any insurance effected by the Mortgagor on any part of the Mortgaged Premises whether or not required under this Mortgage, shall be for the mutual benefit of the Mortgagee on its own behalf and on behalf of the Holders and the Mortgagor and shall be subject to all other provisions of this Mortgage. 3. Alterations. 3.1 Neither the Improvements nor the Fixtures (except as permitted in the Indenture or this Mortgage) shall be removed, demolished or materially altered, except that the Mortgagor may: (a) make non-structural alterations to the extent that such alterations constitute alterations in the normal course of business, including removal and reconstruction of interior walls and relocation of hotel and casino facilities; (b) replace the Fixtures or any part thereof on the terms and conditions set forth in the Indenture and (c) make any other alteration, structural or non-structural, (A) with an estimated cost of less than $500,000; (B) with a cost estimated by the architect, engineer or general contractor supervising such alteration to be in excess of $500,000 but not exceeding $2,000,000 after the Mortgagor shall have given written notice to the Mortgagee of such alteration; (C) with a cost estimated by the architect, engineer or general contractor supervising such alteration to be in excess of $2,000,000 but not exceeding $20,000,000 after the Mortgagor shall have given written notice to the Mortgagee of such alteration, together with an Officer's Certificate of the Mortgagor that such alteration complies with items (i) through (viii) below, inclusive, and either (I) the Mortgagee shall have approved such alteration in writing, such approval not to be unreasonably withheld or delayed or (II) the Holders of at least 25% in principal amount of Outstanding Securities shall have approved such alteration; and (D) with a cost estimated by the architect, engineer or general contractor supervising such alteration to be in excess of $20,000,000 after the Mortgagor shall have given written notice to the Mortgagee, together with a duly authorized certificate from an officer of the Mortgagor (an "Officer's Certificate") that such alteration will comply with items (i) through (ix), below, inclusive, and based on the information provided in such certificate and the documentation required to be provided under this subsection to the Mortgagee, the Holders of at least 25% in principal amount of Outstanding Securities shall have approved such alteration. 10 The items with which the Officer's Certificate shall state the Mortgagor will comply, as set forth above with regard to alterations or Improvements made to the Mortgaged Premises under this Section 3.1, are as follows: (i) any change or alteration, once commenced, shall be made promptly, in good and workmanlike manner and in compliance with all material requirements of applicable law ("Legal Requirements"); (ii) appropriate builder's risk (if the total cost of the proposed change or alteration exceeds Two Million Dollars ($2,000,000)), workers' compensation, and general liability insurance shall be maintained for any work in progress; (iii) the Mortgaged Premises shall be kept free of Liens for labor and materials supplied or claimed to have been supplied in connection with such change or alterations or in the event that such Liens have been filed against the Mortgaged Premises, the Mortgagor shall either satisfy such Liens, stay their effect, bond against or otherwise secure against each to the reasonable satisfaction of the Mortgagee; (iv) such alterations will not materially and adversely affect the value, character and usefulness of the Mortgaged Premises; (v) such alterations shall not cause (a) the Sands (inclusive of any such completed alterations) to fail to qualify (absent a waiver by the Casino Control Commission of such nonqualifying condition(s)) as a licensed hotel/casino under the Casino Control Act or (b) the Sands to fail to be independently qualifiable (exclusive of any such alterations) at all times as a licensed hotel/casino under the Casino Control Act; (vi) any alteration or replacement Fixture, upon completion or replacement, as the case may be, shall be subject to the Lien of this Mortgage, the Lien created by the security agreement made a part of this Mortgage or the Lien of the Security Agreement and shall be free from any title retention, security agreement or other encumbrance, except the Lien of this Mortgage and the other Security Documents and encumbrances permitted under Section 1014 of the Indenture; (vii) no Event of Default shall have occurred or be continuing or occur as a result of the proposed alteration or replacement; (viii) with respect to any proposed alteration with a cost estimated by the architect, engineer or general contractor supervising such alteration to be in excess of $2,000,000 but less than $20,000,000, the Mortgagor shall submit to the Mortgagee (a) copies of all materials relating thereto when filed with the Casino Control Commission, (b) if no materials relating thereto are to be filed with the Casino Control Commission and the estimated cost of such project is in excess of $5,000,000, a description of such proposed alteration (which shall include the type of financing, if any, the estimated cost, the parties involved and the estimated date of completion), and copies of all available plans and specifications in connection therewith, no later than 45 days prior to commencement of such proposed alteration and (c) final plans, 11 specifications and Casino Control Commission approvals of such alteration no later than 90 days after completion thereof; (ix) with respect to any proposed alteration with a cost estimated by the architect, engineer or general contractor supervising such alteration to be in excess of $20,000,000, the Mortgagor shall submit to the Mortgagee all materials described in item (viii) above as well as any additional information reasonably required by the Holders to review such proposed alteration; and (x) the Mortgagor will pay all reasonable expenses of the Mortgagee in connection with any consent of the Mortgagee required pursuant to this Section 3, including, without limitation, in connection with the review of any plans and specifications in connection therewith. 3.2 Mortgagor will at all times maintain sufficient parking spaces for the use of the Sands which shall in no event be less than approximately 1,675 spaces. 4. Estoppel Certificates. The Mortgagor, within 10 days after a request by the Mortgagee, will furnish a written statement, duly acknowledged, and in form for recording, of the amount due on this Mortgage and the Mortgagor will deliver such a statement further setting forth whether any offsets or defenses exist against the Liabilities. The Mortgagee, within 10 days after request from the Mortgagor, will furnish a written statement, duly acknowledged and in form for recording of the amount due on the Mortgage and stating whether it has received written notice of or has actual knowledge of any defaults existing hereunder and containing such other information as the Mortgagor may reasonably request. 5. Impositions. 5.1 The Mortgagor will pay or cause to be paid as and when due and payable, and before they become delinquent, all Impositions (as such term is defined in subsection 5.4.4 hereof) levied upon the Mortgaged Property, or any part thereof for which the Mortgagor and/or the Mortgaged Property, or any part thereof, shall be assessed or chargeable and will cause tenants under Major Leases (as such term is defined in the Assignment of Leases, dated of even date herewith, made by Mortgagor to Mortgagee) to comply with all lease provisions or contracts relating to payment of such Impositions. Notwithstanding the foregoing, if by law any Imposition may at the option of the taxpayer be paid in installments (whether or not interest shall accrue on the unpaid balance thereof), the Mortgagor may cause to be paid or to pay the same (and any accrued interest on the unpaid balance of such Imposition) in installments as they fall due and before any fine, penalty, further interest or cost may be added thereto; provided that no Event of Default (as defined in Section 12 hereof) shall then exist under this Mortgage and that payment in installments would not create or cause to be created any Lien on the Mortgaged Premises or any portion thereof which could be levied upon prior to the failure to pay a then due installment. 5.2 The Mortgagor will pay any taxes (including, without limitation, stamp taxes, but excluding (a) income taxes assessed by the United States government or the State of New Jersey or any other State or any political subdivision of any of them, (b) franchise, estate or 12 similar taxes based upon or measured by income) imposed on the Mortgagee on its own behalf and on behalf of the Holders, their successors or assigns, by reason of the holding of this Mortgage or any of the Securities, as the case may be, or the receipt of the interest payable thereunder. 5.3 Unless manifestly erroneous, the certificate, advice or bill of the appropriate official designated by law to make or issue the same or to receive payment or any Imposition, which such certificate, advice or bill indicates the nonpayment of such Imposition, shall be prima facie evidence that such Imposition is due and unpaid at the time of the making or issuance of such certificate, advice or bill. 5.4 The Mortgagor shall have the right, at Mortgagor's sole cost, after giving notice to the Mortgagee to contest the amount or validity, in whole or in part, of any Imposition, or to seek a reduction in the valuation of the Mortgaged Property or any portion thereof as assessed for real estate or personal property tax purposes by appropriate proceedings diligently conducted in good faith and where the amount so contested or for which a reduction is sought is in excess of $2,000,000, the Mortgagor shall also prior to commencement of such contest or proceeding have complied with the provisions of subsections 5.4.1 through 5.4.5, inclusive, hereof or made payment of such Imposition unless such payment would operate as a bar to such contest or interfere materially with the prosecution thereof, in which event the Mortgagor may postpone or defer payment of such Imposition after compliance with the provisions of subsections 5.4.1 through 5.4.5, inclusive, hereof if: 5.4.1 Neither the Mortgaged Property nor any part thereof would by reason of such postponement or deferment be in danger of being forfeited or lost prior to final determination of such contest or proceeding and the Mortgagee shall not, by virtue of the contest or proceeding, be in any danger of criminal liability and neither the Mortgaged Property nor any part thereof by any interest therein would be subject to the imposition of any lien for which the Mortgagor has not furnished adequate security as provided below; and 5.4.2 Subject to the provisions of the first paragraph of Section 5.4, the Mortgagor shall either have (a) deposited with the Mortgagee in trust the amount (at the option of the Mortgagor in cash or in the form of a letter of credit) so contested and unpaid, together with all interest and penalties in connection therewith and all charges that may or might be assessed against or become a charge on the Mortgaged Property or any part thereof as estimated by the Mortgagee, in such proceedings or (b) posted with the Mortgagee a bond issued by a surety company reasonably satisfactory to the Mortgagee, whereby such surety undertakes to pay such Imposition, interest, penalties and charges (x) in the event that the Mortgagor shall fail to pay the same upon the final disposition of the contest (including appeals), or (y) in the event that the Mortgaged Property or any part thereof is in danger of being sold, forfeited or lost during the pendency of such contest or (z) if the Mortgagor fails to increase the amount of such bond as hereinafter provided. Any deposit made by the Mortgagor with the Mortgagee under the provisions of this subsection 5.4.2, together with any additions thereto made pursuant to this subsection 5.4.2, shall be held in trust and, at the request of the Mortgagor, invested in Collateral Investments (as defined in the Security Agreement), and the interest on such deposits shall be disposed of as hereinafter provided. Upon the termination of any such proceeding (including appeals), or if the Mortgagor should so elect, at any time prior thereto, the Mortgagor shall pay 13 the amount of such Imposition or part thereof as finally determined in such proceeding (or appeal), the payment of which may have been deferred during the prosecution of such proceeding (or appeal), together with any costs, fees, interest, penalties or other liabilities in connection therewith, and upon such payment, the Mortgagee shall return any amount deposited with it together with interest, if any, received thereon with respect to such Imposition. Such payment, at the request of the Mortgagor, shall be made by the Mortgagee out of the amount deposited with it pursuant to clause (a) of this subsection 5.4.2 with respect to such Imposition, to the extent that such amount is sufficient therefor, and any balance due shall be paid by the Mortgagor and any balance remaining shall be paid to the Mortgagor together with interest, if any, received thereon. If, at any time during the continuance of such proceeding, the Mortgagee shall reasonably deem the amount deposited with it or provided by bond insufficient, the Mortgagor shall, within ten (10) days after demand, make an additional deposit of, or increase the amount of its letter of credit or bond by, such additional amount as the Mortgagee may request to cover payment of the items set forth in this subsection 5.4.2, and upon failure of the Mortgagor so to do, the Mortgagee may, after 10 days following written notice from the Mortgagee to the Mortgagor, apply the amount theretofore deposited with it (or the Mortgagee may submit for payment the letter of credit and apply the amount thereof, or may require application of the bonded amount by the surety company, if a bond has been furnished) to or on account of the payment, removal or discharge of such Imposition and the interest and penalties in connection therewith and any costs, fees or other liability accruing in any such proceeding, or any part of any of the same and the balance, if any, shall be returned to the Mortgagor. The Mortgagor shall, during the continuance of any contest (including appeals) referred to herein and at its sole cost and expense, provide the Mortgagee with such information relating to the same as the Mortgagee may reasonably request. If, at any time during the continuance of such proceeding, the Mortgaged Property or any part thereof is, in the judgment of the Mortgagee, in any reasonable danger of being sold, forfeited or lost, the Mortgagee may require, after ten (10) days' notice to the Mortgagor, that the amount theretofore deposited with it be applied to the payment of such Imposition (or the Mortgagee may submit for payment the letter of credit and apply the amount thereof, or may require application of the bonded amount by the surety company, if a bond has been furnished) in the manner provided in the preceding sentence. Notwithstanding anything contained herein to the contrary, no such deposit held by the Mortgagee, or any part thereof, shall be returned to the Mortgagor so long as any Event of Default shall exist hereunder. The Mortgagee shall act as the holder, in trust, of the monies, if any, deposited by the Mortgagor pursuant to this subsection 5.4.2. 5.4.3 The Mortgagor will exhibit to the Mortgagee the original receipts (or copies thereof) or other proof reasonably satisfactory to the Mortgagee of the payment of all real estate taxes within 30 days after the same are required to be paid by the Mortgagor in compliance with subsection 5.1 hereof. Concurrently with the delivery of the financial statements and other information required by Section 1009 of the Indenture, Mortgagor shall for all other Impositions deliver to the Mortgagee quarterly an Officer's Certificate that, to the best knowledge of such officer, all such Impositions have been paid and that, to the best of such officer's knowledge, the aggregate of all unpaid amounts on such Impositions do not exceed $25,000, except for Impositions which are being contested in accordance with the provisions of the first paragraph of subsection 5.4. The Mortgagor shall immediately notify the Mortgagee of the receipt by the Mortgagor of any notice that any Imposition has not been paid when due and shall, at the same time, furnish to the Mortgagee a copy of such notice of non-payment. 14 5.4.4 "Impositions" shall mean all duties, taxes (including sales and use taxes), water, sewer and other rents, rates and charges, assessments (including, without limitation, all assessments for public improvements or benefit, whether or not commenced or completed prior to the date hereof), charges for public or private utilities, highway services, communication services, sprinkler systems, protective services and levies, license and permit fees, inspection fees and other authorization fees and other charges, ordinary or extraordinary, whether foreseen or unforeseen, of any kind and nature whatsoever, including interest or penalties thereon, which prior to or during the term of this Mortgage will have been or may be laid, levied, assessed or imposed upon or become due and payable out of or in respect of, or become a Lien on the Mortgaged Property or any part thereof, or the occupancy, use or possession of or activity conducted on the Mortgaged Property or any part thereof or which are levied or assessed against the income received by the Mortgagor from all or any part of the Mortgaged Property by virtue of any present or future law, order or ordinance of the United states of America or of any state, county or local government or of any department, office or bureau thereof or of any other governmental authority (such governments or other authorities being collectively referred to herein as a "Governmental Authority") having or claiming jurisdiction over the Mortgagor and/or the Mortgaged Premises or any part thereof. The term "Impositions" shall not include (a) income taxes assessed by the United States government or the State of New Jersey or any other State or any political subdivision of any of them, or (b) franchise, estate or similar taxes based upon or measured by income. 6. Changes in Method of Taxation. ----------------------------- 6.1 In the event of the passage after the date hereof of any law applicable to the Mortgaged Premises or any part thereof, (i) deducting from the value of the Mortgaged Premises, for the purposes of taxation, any Lien thereon, or changing in any way the laws for the taxation of mortgages or debts secured by mortgages or the manner of collection of any such taxes, or (ii) imposing a tax, either directly or indirectly, on this Mortgage or any other documents evidencing or securing the Liabilities, in each case, the result of which affects adversely the Mortgagee, the Mortgagee shall have the right to declare, by written notice delivered to Mortgagor, that an Event of Default will occur hereunder one hundred twenty (120) days from the giving of such written notice unless the Mortgagor is exempt from such tax or, if not exempt from such tax, is permitted by law to pay the whole of such tax (or to provide funds to the Mortgagee to pay such taxes) and assumes as an obligation and Liability secured hereby the obligation to make all payments (or provide funds to the Mortgagee to pay such taxes) of any tax so imposed until full payment of the Liabilities. The Mortgagor shall promptly notify the Mortgagee of the occurrence of any of the events set forth in clauses (i) or (ii) of this Section 6.1. 6.2 The Mortgagor shall not have, nor will claim nor demand nor be entitled to receive, any credit or credits by virtue of the payment of taxes as provided herein against the Liabilities or the other sums payable as provided herein and in the Securities secured hereby, and such taxes shall be paid without abatement of or deduction from, and without counterclaim or setoff against such principal, interest and other sums, for any reason, including, without limitation, for so much of the taxes assessed against the Mortgaged Premises as is equal to the tax rate applied to the amount due on this Mortgage or any part thereof, and no deduction shall otherwise be made or claimed from the taxable value of the Mortgaged Premises, or any part thereof, by reason of the indebtedness secured by this Mortgage. 15 7. Expenses of Litigation. If an action to foreclose this Mortgage or to collect any of the Liabilities is commenced or any other action or proceeding is commenced to which the Mortgagee is or becomes a party or in which the Mortgagee is defending or upholding the Lien of this Mortgage, or in which the Mortgagee is served in with any legal process, discovery notice or subpoena relating to this Mortgage, all reasonable sums paid by the Mortgagee for the expense of any such litigation or appearance or action in response to any such legal process, discovery notice or subpoena (including attorneys' fees and disbursements associated with legal costs) shall be paid by the Mortgagor within thirty (30) days after notice has been given by the Mortgagee to the Mortgagor, together with interest thereon on such amounts as have actually been paid by the Mortgagee to third parties at a rate of interest equal to the greater of the prime rate of the Mortgagee plus 2% per annum, and such amounts shall be a Lien on the Mortgaged Property prior to any other right or title to, interest in or claim upon the Mortgaged Property subordinate to the Lien of this Mortgage, and shall be secured by this Mortgage, and, in any action or proceeding to foreclose this Mortgage, or to recover or collect any of the Liabilities, the provisions of law respecting the recovery of costs, disbursements and allowances shall prevail unaffected by this covenant. However, if such action or proceeding is not one relating to the enforcement of the rights of any Holders or the Lien of this Mortgage, the Mortgagee shall promptly notify the Mortgagor of such action or proceeding and the Mortgagor may participate in the conduct of such action or proceeding at the Mortgagor's sole cost and expense. 8. Maintenance. Subject to the Mortgagor's rights of alteration pursuant to Section 3 hereof, the Mortgagor will maintain and operate the Sands and the hotel that is the subject of the Madison House Lease at a quality level at least as high as that existing on the date hereof and keep the Mortgaged Property in good condition and repair (subject to ordinary wear and tear), will not commit or suffer any waste of the Mortgaged Property and will comply with, or cause to be complied with, all statutes, ordinances and requirements of any Governmental Authority to which the Mortgaged Property are subject and which failure to comply therewith would have a materially adverse effect on the Mortgaged Property. Notwithstanding the foregoing, the Mortgagor shall have the right to contest the application of any such statute, ordinance or requirement of a Governmental Authority; provided that, if such statute or ordinance or requirement of a Governmental Authority imposes an immediate fine or monetary Imposition in an amount in excess of $2,000,000 upon the Mortgaged Premises for the failure to comply with such ordinance or requirement, the Mortgagor shall either pay such fine or monetary imposition and file an action for recovery thereof or deposit with Mortgagee, in the manner described in Section 5.4.2 hereof, an amount reasonably determined by the Mortgagee to be sufficient to protect the Mortgagee's interest (on its own behalf and on behalf of the Holders). Subject to the provisions of Section 9.3 hereof, the Mortgagor will promptly repair, restore, replace or rebuild any part of the Mortgaged Premises now or hereafter subject to the Lien of this Mortgage which may be damaged or destroyed by any casualty whatsoever, free from Liens and encumbrances, except the Lien of this Mortgage and the other Security Documents and the encumbrances permitted by Section 1014 of the Indenture, without regard to the adequacy of any insurance proceeds, provided that the insurance proceeds are made available to the Mortgagor pursuant to Section 9 of this Mortgage. The Mortgagor will do all other things reasonably required for the maintenance and continuance of all such services in respect of Impositions to the extent required to fulfill the obligations set forth in this Section 8. 16 9. Destruction: Restoration; Condemnation. 9.1 Definitions. "Restoration" shall, for purposes of this Mortgage, mean the replacement, rebuilding or repairing of damaged, destroyed or, in the case of a condemnation, remaining areas of the Mortgaged Premises or the repair or replacement of the Mortgaged Premises not so condemned, in either case as nearly as possible to the condition, character and size of the Mortgaged Premises immediately prior to such damage, destruction or condemnation to comply with the Casino Control Act and all other material Legal Requirements and all material requirements of any insurance policy covering or applicable to the Mortgaged Premises including, without limitation, all material requirements of any issuer of such policy and any applicable board of underwriters. 9.2 Destruction. If the Mortgaged Premises, or any part thereof, shall be destroyed or damaged by fire or any other casualty, the Mortgagor shall give prompt notice thereof to the Mortgagee. If the Mortgagor does not promptly make proof of loss after a casualty, the Mortgagee may make proof of loss, and each insurance company concerned is hereby authorized and directed to make payment for such loss directly to the Mortgagor and/or the Mortgagee on its own behalf and on behalf of the Holders as their interests appear in accordance with the provisions of subsection 2.3 hereof. In all instances where the insurance proceeds are less than $1,000,000, the Mortgagor shall use such proceeds only for Restoration. In all instances of destruction or casualty as aforesaid where the insurance proceeds exceed $1,000,000, the insurance proceeds shall be deposited into and held in the Collateral Account and applied in accordance with Section 1018 of the Indenture and subsection 9.3 hereof. In the event that the Mortgagee releases such proceeds to the Mortgagor, the Mortgagor shall be obligated to restore or repair the Mortgaged Premises. In the event of foreclosure of the Mortgaged Premises or other transfer of title to the Mortgaged Premises in extinguishment of the indebtedness under the Securities and this Mortgage, all right, title and interest of the Mortgagor in and to any insurance policies then in force shall pass to the purchaser or grantee and the Mortgagor hereby appoints the Mortgagee its attorney-in-fact, in the Mortgagor's name, to assign and transfer all such policies and proceeds to such purchaser or grantee, and the Mortgagor shall be entitled only to a credit in reduction of the then outstanding Liabilities secured hereby in the amount of the cancellation refund actually received by the Mortgagee. The Mortgagor agrees, within fifteen (15) days following such foreclosure and written request by the Mortgagee, to execute and deliver such assignments or other authorizations or instruments as may be necessary or desirable to effectuate the foregoing. 9.3 Restoration. If any insurance proceeds or condemnation award (including interest thereon, the "Restoration Funds"), held by the Mortgagee in the Collateral Account or otherwise are to be applied to the Restoration of the Mortgaged Premises or any portion thereof as determined in this Section 9.3 or Section 1018 of the Indenture, the Mortgagor shall promptly restore, replace or rebuild the damaged or destroyed Mortgaged Premises and such Restoration shall be performed only in accordance with the following conditions: (a) In the event the cost estimated by the architect supervising the Restoration (the "Estimated Restoration Cost") is less than $2,000,000, the Mortgagor shall diligently use the Restoration Funds to restore and repair the Mortgaged Premises provided that any proceeds remaining after the Restoration may be retained by the Mortgagor; provided 17 further, however, that if any Event of Default shall occur and then exist, the Restoration Funds shall be paid over to the Mortgagee to be applied in accordance with the terms of the Indenture. (b) Intentionally Omitted. (c) Prior to commencement of the Restoration or at any time during the Restoration, if the Estimated Restoration Costs exceeds the amount of the Restoration Funds by a sum greater than or equal to $2,000,000, the amount of such excess shall be paid by the Mortgagor to the Mortgagee in the form of cash or a letter of credit (reasonably acceptable in form and substance to the Mortgagee) to be added to the Restoration Funds in the Collateral Account and in the event such shortfall is less than the sum of $2,000,000, the Mortgagor shall pay such shortfall on an ongoing basis during the course of the Restoration. (d) If no Default or Event of Default shall have occurred and be continuing, all proceeds of loss of rents/business interruption insurance payable as a result of any damage or destruction affecting the Mortgaged Premises shall be paid first, to the Mortgagee in an amount sufficient to pay, when due, all Liabilities, including the interest on and the principal of the Securities, for so long as the interruption shall continue or until coverage is exhausted, and second, to the Mortgagor. If a Default or Event of Default shall have occurred and be continuing, all such proceeds of loss of rents/business interruption insurance shall be paid to the Mortgagee. The Mortgagee shall hold such proceeds in trust and, at the direction of the Mortgagor, shall invest such proceeds in the type of investments set forth in clauses (a) through (d) in the definition of "Cash Equivalents" in the Indenture (such investments being referred to hereafter as "Cash Equivalents". The Mortgagee shall apply or cause to be applied the proceeds and such income received thereon to the payment of taxes, insurance premiums, rents, interest on and principal of the Securities, and the normal operating expenses of the Mortgaged Property from and after the date of the occurrence of such damage or destruction until the completion of the necessary Restoration, if any, or until the exhaustion of such proceeds, whichever first occurs. Upon completion of such Restoration, any remainder of such loss of rents/business interruption insurance proceeds in the hands of the Mortgagee shall, provided that no Event of Default shall be continuing hereunder, be paid to the Mortgagor with interest received thereon, if any. (e) Except as provided in Section 1018 of the Indenture, nothing in this Section 9 shall relieve the Mortgagor of its duty to repair, restore, rebuild or replace the Mortgaged Property following damage or destruction by fire or other casualty or partial condemnation in the event that no or inadequate proceeds of insurance are available to defray the cost of such repairing, restoring, rebuilding or replacement. In addition, nothing contained herein shall relieve the Mortgagor of its duty to pay all Liabilities subsequent to the occurrence of any fire or other casualty or condemnation; provided, however, that, if the Mortgagee is applying the proceeds of business interruption insurance or temporary taking proceeds to the payment of the principal and accrued interest under the Securities, the Mortgagor shall not be required to make double payments. 9.4 Condemnation/Eminent Domain. (a) Immediately upon obtaining knowledge or the institution of any proceedings for the condemnation or taking, either permanent or temporary, by eminent domain of the Mortgaged Premises or any portion thereof, the 18 Mortgagor will notify the Mortgagee of the pendency of such proceedings. The Mortgagee may, but shall not be obligated to, participate in any such proceedings, and the Mortgagor shall from time to time deliver to the Mortgagee all instruments requested by it to permit such participation. Except as otherwise provided herein, the Mortgagor shall, at its expense, diligently prosecute any such proceeding and shall consult with the Mortgagee, its attorneys and experts and cooperate with them in any defense of any such proceedings. The Mortgagor will not enter into any agreement for the taking or conveyance of the Mortgaged Premises or any material part thereof, with anyone authorized to acquire the same by eminent domain or in condemnation unless the Mortgagor shall have delivered to the Mortgagee an Officer's Certificate from the Mortgagor that such agreement is fair and reasonable in light of all of the circumstances. (b) All awards and proceeds of condemnation in respect of any of the Mortgaged Premises shall be applied in the same manner provided in Section 9.3 hereof in respect of damage or destruction. 10. Inspection. The Mortgagee and any persons authorized by the Mortgagee shall have the right to enter and inspect the Mortgaged Premises upon reasonable notice at all reasonable times, but shall undertake such inspections in such a manner as to minimize disruption and interference of the operation thereof. 11. Assignment of Rents, Issues and Profits. (a) Subject to the limitations contained herein, the Mortgagor hereby assigns to the Mortgagee on its own behalf and on behalf of the Holders the rents, issues and profits derived from (i) all leases of the Mortgaged Premises now or hereafter entered into by the Mortgagor and (ii) all occupancy, license and concession agreements in respect of any part of the Mortgaged Premises now or hereafter entered into, and the Mortgagor grants to the Mortgagee the right to enter the Mortgaged Premises for the purpose of collecting the same and to lease the Mortgaged Property, or any part thereof, and to apply said rents, issues and profits on account of the Liabilities. This assignment, grant and right to apply rents, issues and profits shall continue in effect until the Liabilities are paid in full, but the Mortgagee hereby waives the right to enter the Mortgaged Premises and/or to collect said rents, issues and profits, and the Mortgagor shall be entitled to collect, receive, use and retain said rents, issues and profits, until the occurrence of and during the continuation of an Event of Default; such right of the Mortgagor to exercise all such rights, including the right to collect, receive, use and retain said rents, issues and profits may be revoked by the Mortgagee upon the occurrence of and during the continuation of an Event of Default by the Mortgagee giving written notice of such revocation to the Mortgagor. The Mortgagor shall not accept prepayments of installments of rent under the leases which payments would, in the aggregate for all such leases, exceed the sum of $1,000,000 (except for tenant finish work performed with respect to any such lease). If, following the occurrence of an Event of Default, the Mortgagee shall thereafter elect to discontinue the exercise of any right or remedy assigned or granted to the Mortgagee on its own behalf and on behalf of the Holders pursuant to this Section 11 or such Event of Default has otherwise been cured, the Mortgagor's rights under this subsection 11(a) shall be automatically reinstated, subject to the same or any other right or remedy hereunder being reasserted at any time and from time to time following any subsequent Event of Default. Anything herein to the contrary notwithstanding, the rights of the Mortgagor to collect or retain any sums shall not apply to amounts to be used by Mortgagor to 19 cure an Event of Default or otherwise make any payment in respect of Securities or make any payment or perform any obligation under the Indenture or other Security Document (all of which, whether paid to Mortgagor or Mortgagee, shall be made available to Mortgagor for such purpose). (b) The granting of the assignment created in Section 11(a) hereof shall not, prior to entry upon and taking of possession of the Mortgaged Property by the Mortgagee, be deemed or construed to constitute the Mortgagee in possession nor thereafter or at any time or in any event obligate the Mortgagee to perform or discharge any obligation of the Mortgagor or to appear in or defend any action or proceeding relating to the Mortgaged Property or the leases relating thereto nor shall the Mortgagee be liable in any way for any injury or damage to person or property sustained by any individual or individuals in or about the Mortgaged Property and the Mortgagor agrees to indemnify and hold harmless the Mortgagee against any and all such liability, loss or damage, except for losses occurring as the result of gross negligence or willful misconduct on the part of the Mortgagee. 12. Events of Default. The occurrence of one or more of the following events shall constitute an "Event of Default" (occurring for any reason whatsoever, whether voluntary or involuntary, or by operation o(pound) law or pursuant to or in compliance with any judgment, decree or order of any court or of any Legal Requirement or otherwise): (a) any Event of Default, as defined in the Indenture; or (b) upon the assignment of any of the rents, issues, profits or leases of any portion of the Mortgaged Property, or any part thereof, to anyone other than the Mortgagee on its own behalf and on behalf of the Holders without the prior written consent of the Mortgagee, except as permitted in the Indenture, and such assignments of rents, issues, profits or leases are not rescinded or otherwise voided following the giving by the Mortgagee to the Mortgagor of 30 days' written notice thereof; or (c) in the event of a lease, assignment or other transfer of any portion of the Mortgaged Property other than as permitted in the Indenture, this Mortgage or as Permitted Encumbrances, and such lease or other transfer is not rescinded or otherwise voided following the giving by the Mortgagee to the Mortgagor of 30 days' written notice thereof; or (d) the event that the Mortgagee declares that an Event of Default has occurred in accordance with Section 6.1. 12.2 Remedies. Upon the occurrence of an Event of Default hereunder, in addition to its remedies contained in the Indenture, the Mortgagee on its own behalf and on behalf of the Holders may take any or all of the following actions, at the same or at different times: (a) Possession. Enter upon and take possession of the Mortgaged Property, and lease and let the Mortgaged Property, or any part thereof, and receive all the rents, issues and profits thereof which are overdue, due or to become due, and apply the same, after payment of all reasonably necessary charges and expenses, on account of the amounts hereby secured, and the 20 Mortgagee is hereby given and granted full power and authority to do any act or thing, which the Mortgagor might or could legally do in connection with the management and operation of the Mortgaged Property. The granting of the authority so created shall not, prior to entry upon and taking of possession of the Mortgaged Property by the Mortgagee, be deemed or construed to constitute the Mortgagee in possession nor thereafter or at any time or in any event obligate the Mortgagee to perform or discharge any obligation of the Mortgagor or to appear in or defend any action or proceeding relating to the Mortgaged Property or the leases relating thereto nor shall the Mortgagee be liable in any way for any injury or damage to person or property sustained by any individual or individuals in or about the Mortgaged Property and the Mortgagor agrees to indemnify and hold harmless the Mortgagee against any and all such liability, loss or damage, except for losses occurring as the result of gross negligence or willful misconduct on the part of the Mortgagee. (b) Foreclosure. Institute an action of mortgage foreclosure, or take other action as the law may allow, at law or in equity, for the enforcement of this Mortgage, and proceed thereon to final judgment and execution of the entire unpaid balance of the Liabilities including costs of suit, interest and reasonable attorneys' fees. In case of any sale of the Mortgaged Property by virtue of judicial proceedings, the Mortgaged Property may be sold in one parcel and as an entirety or in such parcels, manner or order as the Mortgagee in its sole discretion may elect. The failure to make any tenants parties defendant to a foreclosure proceeding and to foreclose their rights will not be asserted by the Mortgagor as a defense in any proceeding instituted by the Mortgagee to collect any of the Liabilities. (c) Appointment of Receiver. Without notice to the Mortgagor, appoint a receiver of the rents, issues and profits of the Mortgaged Property without the necessity of proving either the depreciation or the inadequacy of the value of the security or the insolvency of the Mortgagor or any person who may be legally or equitably liable to pay moneys secured hereby and the Mortgagor and each such person waives such proof and hereby consents to the appointment of a receiver. (d) Excess Monies. Apply on account of the unpaid Liabilities and the interest thereon or on account of any arrearages of interest thereon, or on account of any balance due to the Mortgagee after a foreclosure sale of the Mortgaged Property, or any part thereof, any unexpended moneys still retained by the Mortgagee that were paid by the Mortgagor to the Mortgagee for the payment of, or as security for the payment of, taxes, assessments, municipal or governmental rates, charges, Impositions, Liens, water or sewer rents, or insurance premiums, if any, or in order to secure the performance of some other act by or obligation of the Mortgagor. (e) Other Remedies. Exercise any and all other rights and remedies granted under this Mortgage or now or hereafter existing in equity, at law, by virtue of statute or otherwise, including, without limitation, the right and power to sell the whole or any portion of the Mortgaged Property according to law. 12.3 Remedies, Cumulative and Concurrent. The rights and remedies of the Mortgagee on its own behalf and on behalf of the Holders as provided in this Mortgage and the other documents securing the indebtedness evidenced by the Securities will be cumulative and concurrent and may be pursued separately, successively or together against the Mortgagor or 21 against other obligors or against the Mortgaged Property, or any one or more of them, in the sole and absolute discretion of the Mortgagee, and may be exercised as often as occasion for such pursuit arises. The failure to exercise any such right or remedy will not be construed as a waiver or release of that right or remedy. The Mortgagee's consent to any act or omission by subsequent act or omission or a waiver of the need for such consent in any future or other instance. 12.4 Waiver of Exemptions; Marshalling. Subject to any contrary provisions contained in this Mortgage, the Mortgagor hereby waives and releases, to the extent permitted by law: (a) All benefit that might accrue to the Mortgagor by virtue of any present or future law exempting the Mortgaged Property or any part of the proceeds arising from any sale of the Mortgaged Property. from attachment, levy or sale on execution; and (b) Exemption from civil process; and (c) Redemption or extension of time for payment; and (d) Any right to have the Mortgaged Property marshalled. 12.5 Discontinuance of Proceedings. If the Mortgagee has proceeded to enforce any right under the Guarantee, the Indenture, the Securities or this Mortgage or any other document securing the Liabilities and such proceedings have been discontinued or abandoned for any reason, then in every such case, the Mortgagor and the Mortgagee will be restored to their former positions and the rights, remedies and powers of the Mortgagee will continue as if no such proceedings had been taken. 12.6 Application of Proceeds. In the event of any sale of the Mortgaged Property by foreclosure, through suit in equity, by publication or otherwise, the proceeds of any such sale shall be applied in the manner set forth in Section 506 of the Indenture. 13. No Waivers, Etc. Any failure by the Mortgagee to insist upon the strict performance by the Mortgagor of any of the terms and provisions of this Mortgage shall not be deemed to be a waiver of any of the terms and provisions hereof, and the Mortgagee, notwithstanding any such failure, shall have the right thereafter to insist upon the strict performance by the Mortgagor of any and all of the terms and provisions of this Mortgage to be performed by the Mortgagor; neither the Mortgagor nor any other person now or hereafter obligated for the payment of the whole or any part of the sums now or hereafter secured by this Mortgage, including, but not limited to, any guarantor, shall be relieved of such obligation by reason of the failure of the Mortgagee to comply with any request of the Mortgagor, or of any other person so obligated, to take action to foreclose this Mortgage or otherwise enforce any of the provisions of this Mortgage or any provisions relating to the Liabilities including the indebtedness evidenced by the Securities, or by reason of the release, regardless of consideration, of the whole or any part of the security held for the indebtedness evidenced by the Securities or the Liabilities, or by reason of any agreement or stipulation between any subsequent owner or owners of the Mortgaged Property and the Mortgagee extending the time of payment or modifying the terms of the Securities or this Mortgage, without first having obtained the consent 22 of the Mortgagor or such other person and, in the last-mentioned event, the Mortgagor and all such other persons shall continue to be liable to make such payments according to the terms of any such agreement of extension or modification unless expressly released and discharged in writing by the Mortgagee; the Mortgagee may release, regardless of consideration and without the necessity for any notice to or consent by the holder of any subordinate Lien on the Mortgaged Property as may be permitted pursuant to the terms of the Indenture, any part of the security held for the indebtedness evidenced by the Securities or the Liabilities without, as to the remainder of the security, impairing or affecting the Lien of this Mortgage or the priority of such Lien over any subordinate Lien; the holder of any subordinate Lien on the Mortgaged Property shall have no right to terminate any lease affecting the same, or any part thereof, whether or not such lease be subordinate to this Mortgage; and the Mortgagee may resort for the payment of the indebtedness evidenced by the Securities or the Liabilities secured to any other security therefor held by the Mortgagee in such order and manner as the Mortgagee may elect. 14. Revenue Stamps. If at any time the United States of America or the State of New Jersey shall require internal revenue or other stamps to be affixed to the Securities or this Mortgage, the Mortgagor will pay for the same, together with any interest or penalties imposed in connection therewith. 15. Notices. (a) Any request, demand, authorization, direction, notice, consent, waiver or other document provided or permitted by this Mortgage to be made upon, given or furnished to, or filed with: (1) the Mortgagee shall be sufficient for every purpose hereunder if in writing and mailed postage prepaid, by registered or certified mail, return receipt requested, or delivered personally, to the Mortgagee at: Wells Fargo Bank, National Association MAC N9303-121 P.O. Box 1517 Minneapolis, Minnesota 55480 with a copy, in the case of any notice from the Mortgagor to the Mortgagee, given in one of the foregoing manners to: Jones Day 222 East 41st Street New York, New York 10017 Tel.: 212-326-3939 Attention: Donald F. Devine, Esq. (provided that any failure by the Mortgagor to furnish such a copy shall not affect the sufficiency of any such request, demand, authorization, direction, notice, consent, waiver or other document with respect to the Mortgagee); and 23 (2) the Mortgagor shall be sufficient for every purpose hereunder if in writing and mailed postage prepaid, registered or certified mail, return receipt requested, or delivered personally, to the Mortgagor, addressed to it at: The Sands Hotel and Casino Indiana Avenue and Brighton Park Atlantic City, New Jersey 08401 Attention: Patricia Wild, Esq. or at any other address previously furnished in writing to the Mortgagee by the Mortgagor, with a copy given in one of the foregoing manners to: Jones Day 222 East 41st Street New York, New York 10017 Tel.: 212-326-3939 Attention: Donald F. Devine, Esq. and also to the Guarantor at the address provided in the Indenture (provided that any failure to furnish such copies shall not affect the sufficiency of any such demand, request, authorization, direction, notice, consent, waiver or other document provided or permitted to be made, given or furnished in connection with this mortgage). (b) In the event that a notice is given by personal delivery as provided in this Section 15, the party giving such notice shall, within three days after such personal delivery, also give such notice by mail as provided in subsection 15(a) above, provided that such notice shall be effective as of the date of personal delivery. 16. Modification; Amendment. This Mortgage may not be modified, amended, discharged, waived in whole or in part except by an agreement in writing signed by the party against whom enforcement of any such modification, amendment, discharge or waiver is sought. 17. Partial Invalidity. In the event any one or more of the provisions contained in this Mortgage shall for any reason be held to be invalid, illegal or unenforceable, in any respect, such invalidity, illegality or unenforceability shall not affect any other provision hereof, but each shall be construed as if such invalid, illegal or unenforceable provision had never been included. 18. No Subordinate Financing. The Mortgagor shall not execute or deliver, or suffer to exist, any pledge, security agreement, or mortgage (other than this Mortgage and the Permitted Encumbrances) covering all or any portion of the Mortgaged Property except as expressly permitted under Section 1014 of the Indenture. 19. Intentionally Omitted. 20. Security Agreement. It is the intention of the parties hereto that this Mortgage shall constitute a security agreement within the meaning of the Uniform Commercial Code with respect to the Fixtures, and that a security interest shall attach thereto for the benefit of the 24 Mortgagee to secure the Liabilities and all other sums and charges which may become due hereunder or secured hereby. The Mortgagor hereby authorizes the Mortgagee to file financing and continuation statements with respect to the Fixtures in which the Mortgagor has a mortgageable interest, without the signature of the Mortgagor whenever lawful and, upon written request, the Mortgagor shall promptly prepare and execute financing and continuation statements reasonable and necessary to establish and maintain a valid security interest hereunder in form reasonably satisfactory to the Mortgagee to further evidence and secure the Mortgagee's interest in the Fixtures, and shall pay all filing fees in connection therewith. Upon the occurrence of an Event of Default under this Mortgage, the Mortgagee, pursuant to Section 9-501(4) of the Uniform Commercial Code, as said Section is currently constituted or may be hereafter amended, shall have the option of proceeding as to both real and personal property in accordance with its rights and remedies in respect of the real property, in which event the default provisions of the Uniform Commercial Code shall not apply. The parties agree that in the event that the Mortgagee elects to proceed with respect to the Fixtures separately from the real property, ten (10) days' notice of the sale of the Fixtures shall be reasonable notice. 21. Successors and Assigns. All covenants of the Mortgagor contained in this Mortgage are imposed solely and exclusively for the benefit of the Mortgagee on its own behalf and on behalf of the Holders and its successors and assigns, and no other person shall have standing to require compliance with such covenants or shall, under any circumstances, be deemed to be a beneficiary of such covenant, any or all of which may be freely waived in whole or in part by the Mortgagee at any time if in its sole discretion it deems it advisable to do so. But all such covenants of the Mortgagor shall run with the Land and bind the Mortgagor, the successors and assigns of the Mortgagor (and each of them) and all subsequent owners, encumbrancers and tenants of the Mortgaged Premises, and shall enure to the benefit of the Mortgagee, its successors and assigns. The word "Mortgagor" shall be construed as if it read "Mortgagors" whenever the sense of this Mortgage so requires and shall include all successors and assigns of the Mortgagor. The word "Mortgagee" shall be construed to mean the Mortgagee named herein and the successors and assigns thereof. The Mortgagor understands and agrees that whenever herein the Mortgagee's consent is required, the Mortgagee may be obligated, prior to giving such consent, to obtain the agreement of the Holders as required in the Indenture and, in such event, the Mortgagee's obligation to deliver any such consent to the Mortgagor shall be subject to the Mortgagee first obtaining the required Holders' consent. All covenants, agreements and obligations of the Mortgagee hereunder shall inure to the benefit of the Mortgagor and its successors and assigns and shall be binding upon the Mortgagee, Holders, participants and their respective successors and assigns. 22. Governing Law. This Mortgage and all matters relating or pertaining to this Mortgage shall be governed, construed and enforced by and under the laws of the State of New Jersey. 23. Space Leases; Leasehold Estate. 23.1 All Space Leases of all or any portion of the Mortgaged Property hereafter entered into after the date hereof by the Mortgagor (i) will be subordinated to the Lien created by this Mortgage unless Mortgagee directs otherwise and (ii) shall provide that following the sale of the Mortgaged Property or any part thereof through foreclosure or otherwise, or following 25 conveyance of the Mortgaged Property or any part thereof by deed or assignment in lieu of foreclosure, the Space Tenant under each such Space Lease will, upon ten (10) days' written notice from the purchaser of the Mortgaged Property or any part thereof (or its assignee) given within sixty (60) days after the sale thereof, attorn to such purchaser or assignee as the direct tenant of such purchaser or assignee. 23.2 The Mortgagor shall duly and punctually perform and serve all of the material terms, covenants and conditions of the Space Leases required to be performed and observed by it as landlord thereunder substantially in accordance with the terms thereof. The Mortgagor will further do all things reasonably necessary to preserve and keep unimpaired its rights under all Space Leases. The Mortgagor shall require all Space Tenants to observe, keep and perform all material covenants and agreements imposed upon them under the Space Leases. The Mortgagor shall appear in and defend any action or proceeding arising under or in any manner connected with any of the Space Leases. 23.3 The Mortgagor shall furnish to the Mortgagee a copy of each Space Lease promptly after its execution. At any time, and from time to time, upon request and on reasonable notice from the Mortgagee, the Mortgagor shall deliver to the Mortgagee a schedule of all Space Leases then in effect, which schedule shall include the following: (i) the name of the Space Tenant under the Space Lease; (ii) a description of the space leased thereunder in form satisfactory to the Mortgagee, including but not limited to the approximate number of square feet leased thereunder, type of activity performed under such lease and type of space leased; (iii) the rental rate, including any escalations, if any; (iv) the term of the Space Lease and a description of any renewal options; and (v) such other information as the Mortgagee may reasonably request. 23.4 "Space Leases" shall mean any and all leases, licenses, concessions or other agreements (written now or hereafter in effect), which grant a possessory interest in and to, or the right to use part of the Mortgaged Property. "Space Tenant" shall mean the tenant or other user or occupant of such part of the Improvements. 23.5 With respect to the Madison House Lease and the Leasehold Estate created thereby: (a) The Mortgagor shall fully perform and comply with all agreements, terms, covenants, obligations and conditions of the lessee under the Madison House Lease within the time periods provided therein. (b) The Mortgagor shall not, without the Mortgagee's prior written consent (which shall not be unreasonably withheld or delayed), (i) modify, amend, supplement, terminate or cancel the Madison House Lease, (ii) assign, transfer or otherwise convey all or any portion of the Leasehold Estate or (iii) surrender or abandon the Leasehold Estate. (c) The Mortgagor shall give prompt written notice to the Mortgagee of the occurrence of any default or event of default by the lessor or the Mortgagor under the Madison House Lease. 26 (d) No release, forbearance or forgiveness of any of the Mortgagor's obligations under the Madison House Lease shall release or otherwise affect the Mortgagor's obligations under this Mortgage. 24. Indenture. This Mortgage has been executed and delivered pursuant to the terms of the Indenture and is entitled to the benefits of the Indenture. 25. Further Assurances. The Mortgagor will, at any time and from time to time after the execution and delivery of this Mortgage, promptly upon request, execute and deliver such further deeds of trust, mortgages, instruments of further assurances and other documents and do such further acts and things as the Mortgagee may reasonably request in order to evidence further the Lien and security interest of this Mortgage, pursuant to its terms and to protect further the security of the Mortgagee on its own behalf and on behalf of the Holders, and otherwise to effect fully the purposes of this Mortgage. 26. Escrowed Sums. In order to more fully protect the security of this Mortgage and to insure the payment of Impositions and insurance premiums, from and after the occurrence of an Event of Default hereunder and until such Event of Default is cured, the Mortgagor shall pay to the Mortgagee and as "Escrowed Sums", in monthly installments in advance, an amount equal to the pro rata sum of (a) Impositions (estimated wherever necessary) to become due for the tax year during which such payment is so directed and (b) the insurance premiums for the same year for those insurance policies as are required hereunder. If the Mortgagee determines that any amounts theretofore paid by the Mortgagor are insufficient for the payment in full of such Impositions and insurance premiums, the Mortgagee shall notify the Mortgagor of the increased amounts required to provide a sufficient fund, whereupon the Mortgagor shall pay to the Mortgagee, within thirty (30) days thereafter the additional amount as stated in such notice by the Mortgagee. The Escrowed Sums shall be held by the Mortgagee and upon written request of the Mortgagor invested in Cash Equivalents and shall not be commingled with the Mortgagee's other funds and shall be paid directly by the Mortgagee to the applicable Governmental Authority or the insurance companies entitled thereto. Upon assignment of its rights under this Mortgage, the Mortgagee shall have the right to pay over the balance of the Escrowed Sums then in its possession to the assignee and upon assumption of such liability by the assignee, the Mortgagee on its own behalf and on behalf of the Holders shall become completely released from all liability with respect thereto. Upon full payment of the Liabilities or at such earlier time as the Mortgagee may elect, the balance of the Escrowed Sums in the Mortgagee's possession shall be paid over to the Mortgagor and no other party shall have any right or claim thereto. If no Event of Default shall be continuing hereunder, the Escrowed Sums shall, at the option of the Mortgagee, be repaid to the Mortgagor in sufficient time to allow the Mortgagor to satisfy the Mortgagor's obligations under this Mortgage to pay Impositions and the required insurance premiums; or be paid directly by the Mortgagee to the applicable Governmental Authority and the insurance company entitled thereto. If an Event of Default shall be continuing hereunder, however, the Mortgagee shall have the additional option of crediting the full amount of the Escrowed Sums against the Liabilities. Notwithstanding anything to the contrary contained in this Section 26 or elsewhere in this Mortgage, the Mortgagee hereby reserves the right to waive the payment by the Mortgagor to the Mortgagee of the Escrowed Sums, and, in the event that the Mortgagee does so waive such payment, it shall be without prejudice to the Mortgagee's rights to insist, at any subsequent time or times, that such payments be made in accordance herewith. 27 27. Release by Mortgagee. Any release of, regardless of consideration, any part of the Mortgaged Property or any other collateral security for any of the Liabilities or the indebtedness evidenced by the Securities will not in any way impair, affect, subordinate or release the Lien or security interests created in or evidenced by this Mortgage or its stature as a Lien and security interest in and to the Mortgaged Property. For payment of the Liabilities or the indebtedness evidenced by the Securities, the Mortgagee may resort to the security of the Mortgage and/or any other security held by the Mortgagee on its own behalf and on behalf of the Holders in such order and manner as the Mortgagee may elect. The Mortgagee may, to the full extent that it may lawfully do so, pursue any one or more remedies permitted or referred to hereunder or under applicable law to enforce the provisions of this Mortgage, to collect the Liabilities or the indebtedness evidenced by the Securities or to realize upon the security given therefor at the same time or at different times without in any way impairing or waiving its right to pursue any other remedy or remedies so provided. 28. Waiver of Damages. Except as to claims arising out of the negligence or willful misconduct of the Mortgagee, the Mortgagor further waives any claim against the Mortgagee for consequential, special or punitive damages arising in connection with the Indenture, this Mortgage or any of the other documents securing the Securities, and further waives the right to interpose any defense based on any statute of limitations or any claim of laches arising in connection with the Indenture or this Mortgage and any setoff or counterclaim of any nature or description. 29. Unenforceability. If any term, covenant, condition or provision of this Mortgage or the application thereof to any circumstance or to any person, firm or corporation shall be invalid or unenforceable to any extent, the remaining terms, covenants, conditions and provisions of this Mortgage or the application thereof to any circumstances or to any Person, other than those as to which any term, covenant, condition or provision is held invalid or unenforceable, shall not be affected or impaired thereby and each remaining term, covenant, condition and provision of this Mortgage shall be valid and shall be enforceable to the fullest extent permitted by law. 30. Spill Compensation and Control Act and Industrial Site Recovery Act. Industrial Site Recovery Act. A. Representations and Warranties. For the purposes of this Section 30, the Mortgagor makes the following representations only as to properties owned, occupied and/or leased by it and solely on its own behalf: (1) To the best of the Mortgagor's knowledge, none of the real property owned, occupied and/or leased by the Mortgagor, and located in the State of New Jersey, including, but not limited to the Mortgaged Premises, has ever been used by previous owners and/or operators to refine, produce, store, handle, transfer, process, transport, generate, manufacture, treat or dispose of "Hazardous Substances", as such term is defined in N.J.S.A. 58:10-23.11b(k), and the Mortgagor has not in the past used, nor does intend in the future to use, its said real property, including, but not limited to the Mortgaged Premises, for the purpose of refining, producing, 28 storing, handling, transferring, processing, transporting, generating, manufacturing, treating or disposing of said "Hazardous Substances". (2) None of the real property owned, occupied and/or leased by it and located in the State of New Jersey, including, but not limited to the Mortgaged Premises, has been or is now being used or, to the best of Mortgagor's knowledge, has been used as a "Major Facility", as such term is defined in N.J.S.A. 58:10-23.11b(1), and said real property, including, but not limited to the Mortgaged Premises, will not be used as a "Major Facility" after completion of any construction, renovation, restoration and other developmental work which the Mortgagor may undertake thereon. (3) To the best of the Mortgagor's knowledge, no Lien has been attached to any revenues or any real or personal property owned, occupied and/or leased by the Mortgagor, and located in the State of New Jersey, including, but not limited to, the Mortgaged Premises, as a result of the chief executive of the New Jersey Spill Compensation Fund expending monies from said fund to pay for "Damages", as such term is defined in N.J.S.A. 58:10-23.11(g) and/or "Cleanup and Removal Costs", as such term is defined in N.J.S.A. 58:10-23 11b(d), arising from an intentional or unintentional action or omission of the Mortgagor or any previous owner and/or operator of said real property, including, but not limited to the Mortgaged Premises, resulting in the releasing, spilling, pumping, pouring, emitting, emptying or dumping of "Hazardous Substances", as such term is defined in N.J.S.A. 58.10-23.11b(k), into the waters of the State of New Jersey or onto lands from which it might flow or drain into said waters or into waters outside the jurisdiction of the State of New Jersey where damage may have resulted to the lands, waters, fish, shellfish, wildlife, biota, air and other resources owned, managed, held in trust or otherwise controlled by the State of New Jersey. (4) To the best of Mortgagor's knowledge, the Mortgagor has not received a summons, citation, directive, letter or other written communication from the New Jersey Department of Environmental Protection concerning any intentional or unintentional action or omission on the Mortgagor's part resulting in the releasing, spilling, leaking, pumping, pouring, emitting, emptying or dumping of "Hazardous Substances", as such term is defined in N.J.S.A. 58:10-23.11b(k), into the waters or onto the lands of the State of New Jersey, or into the waters outside the jurisdiction of the State of New Jersey resulting in damage to the lands, waters, fish, shellfish, wildlife, biota, air and other resources owned, managed, held in trust or otherwise controlled by and within the jurisdiction of the State of New Jersey. (5) To the best of the Mortgagor's knowledge, none of the real property owned, occupied and/or leased by the Mortgagor and located in the State of New Jersey, including, but not limited to the Mortgaged Property, has ever been used by previous owners and/or operators to generate, manufacture, refine, transport, treat, store, handle or dispose of "Hazardous Substances", or "Hazardous Wastes", as such terms are defined in N.J.A.C. 7:1-3.3, and the Mortgagor does not intend to use any of its real property, including, but not limited to the Mortgaged Property for such purposes. (6) In connection with the purchase of the Mortgaged Premises and any other real property acquired by the Mortgagor on or after January 1, 1984, the Mortgagor required that the Seller of said real property, including the Mortgaged Property, comply with the provisions of the 29 New Jersey Industrial Site Recovery Act (N.J.S.A. 13:1k-6 et seq.) and the Seller did comply therewith. (7) If and to the extent required by applicable law, the Mortgagor has conducted a complete and thorough on-site inspection of the Mortgaged Property, including, but not limited to, a geohydrological survey of soil and sub-surface conditions as well as other tests, to determine the presence of "Hazardous Substances" or "Hazardous Wastes", as such terms are defined in N.J.A.C. 7:1-3.3, and the Mortgagor found no evidence of the presence of said "Hazardous Substances" or Hazardous Wastes" on or in the Mortgaged Property. B. Covenants. (1) If the Mortgagor is presently an owner or operator of a "Major Facility" in the State of New Jersey, as such term is defined in N.J.S.A. 58:10-23.11b(1), or if the Mortgagor ever becomes such an owner or operator, then the Mortgagor shall furnish the New Jersey Department of Environmental Protection with all the information required by N.J.S.A. 58:10-23.11d to the extent applicable. (2) The Mortgagor shall not cause or permit to exist, as a result of an intentional or unintentional action or omission on its part, a releasing, spilling, leaking, pumping, emitting, pouring, emptying or dumping of a "Hazardous Substance", as such term is defined in N.J.S.A. 58:10-23.11b(k) into waters of the State of New Jersey or onto the lands from which it might flow or drain into said waters. or into waters outside the jurisdiction of the State of New Jersey where damage may result to the lands, waters, fish, shellfish, wildlife, biota, air and other resources owned, managed, held in trust or otherwise controlled by the State of New Jersey unless said spill, leak, etc. is pursuant to and in compliance with the conditions of a permit issued by the appropriate federal or state governmental authorities. (3) So long as the Mortgagor shall own or operate any real property located in the State of New Jersey, which is used as a "Major Facility", as such term is defined in N.J.S.A. 58:10-23.11b(1), the Mortgagor shall duly file or cause to be duly filed with the Director of the Division of Taxation in the New Jersey Department of the Treasury, a tax report or return and shall pay or make provision for the payment of all taxes due therewith, all in accordance with and pursuant to N.J.S.A. 58:10-23.11h to the extent applicable. (4) In the event that there shall be filed a Lien against the Mortgaged Premises by the New Jersey Department of Environmental Protection, pursuant to and in accordance with the provisions of N.J.S.A. 58:10-23.11f(f), as a result of the chief executive of the New Jersey Spill Compensation Fund having expended monies from said fund to pay for "Damages", as such term is defined in N.J.S.A. 58:10-23.11g. and/or "Cleanup and Removal Costs", as such term is defined in N.J.S.A. 58:10-23.11b(d), arising from an intentional or unintentional action or omission of the Mortgagor, resulting in the releasing, spilling, pumping, pouring, emitting, emptying or dumping of "Hazardous Substances", as such term is defined in N.J.S.A. 58:10-23.11b(k) into the waters of the State of New Jersey or onto lands from which it might flow or drain into said waters, then the Mortgagor shall, within thirty (30) days from the date that the Mortgagor is given notice that the Lien has been placed against the Mortgaged Premises or within such shorter period of time in the event that the State of New Jersey has commenced steps 30 to cause the Mortgaged Premises to be sold pursuant to the Lien, either (i) pay the claim and remove the Lien from the Mortgaged Premises, or (ii) furnish (a) a bond reasonably satisfactory to the Mortgagee in the amount of the claim out of which the Lien arises, (b) a cash deposit in the amount of the claim out of which the Lien arises, or (c) other security reasonably satisfactory to the Mortgagee in an amount sufficient to discharge the claim out of which the Lien arises (a commitment of a reputable title insurance company to affirmatively insure over or omit such claim shall constitute such reasonably satisfactory security). (5) Should the Mortgagor cause or permit any intentional or unintentional action or omission resulting in the releasing, spilling, leaking, pumping, pouring, emitting, emptying or dumping of "Hazardous Substances", as such term is defined in N.J.S.A. 58:10-23.11b(k), into the waters or onto the lands of the State of New Jersey, or into the waters outside the jurisdiction of the State of New Jersey resulting in damage to the lands, waters, fish, shellfish, wildlife, biota, air or other resources owned, managed or held in trust or otherwise controlled by the State of New Jersey, without having obtained a permit issued by the appropriate governmental authorities, the Mortgagor shall promptly clean up such spill, leak, pumping, pouring, emission, emptying or dumping, if so required by the Department of Environmental Protection in accordance with the provisions of the New Jersey Spill Compensation and Control Act and all other applicable law. C. Exceptions Notwithstanding Subsections A and B above. (1) With respect to Lot 12 in Block 47 of the Tax Map of the City of Atlantic City, two underground oil storage tanks were abandoned in place in accordance with applicable regulations of the New Jersey Department of Environmental Protection ("NJDEP") and the Mortgagor maintains an above ground oil storage tank on such property. (2) The prior owner of Lots 1-6, 9, and 10 in Block 47 abandoned in place 3 underground storage tanks (the "Midtown Bala Properties"), completed product recovery operations and well closure activities with respect to spilled oil product which respect to one such tank, and received "no further action" letters from the NJDEP with respect to such company to remove asbestos from its Midtown Bala Properties improvements prior to the demolition thereof. (3) The Sands may store small quantities of substances that may be "hazardous" substances to use in the ordinary course of operating its casino hotel. 31. Each of the provisions of this Mortgage is subject to and shall be enforced in compliance with the provisions of the Casino Control Act. 32. In this Mortgage, whenever the context so requires, the masculine gender shall include the feminine and/or neuter and the singular number shall include the plural and conversely in each case. THE MORTGAGOR ACKNOWLEDGES THAT THE MORTGAGOR HAS RECEIVED FROM THE MORTGAGEE WITHOUT CHARGE A TRUE COPY OF THIS 31 INSTRUMENT STAMPED "COPY" AND ON WHICH SUCH COPY IS A CERTIFICATION BY THE MORTGAGEE THAT SUCH INSTRUMENT IS A TRUE COPY OF THIS MORTGAGE. 33. Notwithstanding anything to the contrary herein contained or contained in the Indenture, the Security Agreement or any document executed in connection therewith: (i) Mortgagor shall have the right to sell, transfer and convey (the "Sale") the Mortgaged Property in whole or in part (including, without limitation, in a transaction involving a parcel of Land together with all Improvements and Fixtures thereon and all Space Leases pertaining thereto) (the parcel(s) which is the subject of such Sale is hereinafter referred to as the "Conveyed Property") and in connection therewith obtain from Mortgagee a release of the Conveyed Property from the Lien of this Mortgage and the Security Agreement provided that such Sale is made in accordance with the provisions of Section 1017 of the Indenture as if such Sale was an Asset Sale, as that term is defined in the Indenture, regardless of whether such Sale was in fact an Asset Sale. In connection therewith, Mortgagee shall execute, acknowledge and deliver to Mortgagor such documents as Mortgagor may reasonable require to effectuate such release; and (ii) Mortgagor shall have the right to lease (the "Lease") the Mortgaged Property in whole or in part (a parcel of Land together with all Improvements and Fixtures thereon and all Space Leases pertaining thereto) (the parcel(s) which is the subject of such Lease is hereinafter referred to as the "Leased Property") pursuant to a long term ground lease or operating lease and in connection therewith obtain from Mortgagee a nondisturbance agreement reasonably satisfactory to Mortgagor to such Lease provided that the rentals provided for in such Lease, in the aggregate, represents the fair market value of a lease of the Leased Property at that time. * * * * 32 IN WITNESS WHEREOF, the Mortgagor has caused this Mortgage to be signed in its name. ACE GAMING, LLC By: /s/ Patricia Wild ----------------- Name: Patricia Wild Title: Vice President, General Counsel, Secretary Attest: By: /s/ Douglas S. Niethold ----------------------- 33 COUNTY OF NEW YORK ) :SS.: STATE OF NEW YORK ) BE IT REMEMBERED, that on this 22nd day of July 2004, before me, the subscriber, a Notary Public of the State of New York, personally appeared, Patricia Wild, the Vice President, General Counsel and Secretary of ACE Gaming, LLC, a New Jersey limited liability company and the assignor named in the within instrument, who I am satisfied is the person who executed the within instrument, as the Vice President, General Counsel and Secretary of said company, and she acknowledged that she signed and delivered the same as such officer, that the within instrument is the voluntary act and deed of such company made by virtue of authority of its members, on behalf of and as the voluntary act and deed of the company, for the uses and purposes therein expressed, and that he received a true copy of the within instrument on behalf of the assignor named therein. Subscribed before me this 22nd day of July 2004. /s/ Ellen Warren - ----------------------------- Notary Public 34 COUNTY OF NEW YORK ) :SS.: STATE OF NEW YORK ) On July 22, 2004 before me, the subscriber, a Notary Public of the State of New York, personally appeared Douglas S. Niethold who being by me duly sworn according to law on his oath saith that he is the Vice-President, Finance and Chief Financial Officer of ACE Gaming, LLC, a New Jersey limited liability company, the above-named Mortgagor; that Patricia Wild is the Vice President, General Counsel and Secretary of the said company; that he saw the said Vice President, General Counsel and Secretary sign the Mortgage as the act and deed of said company, she being thereunto duly authorized; and that he signed his name to the Mortgage as an attesting witness. /s/ Ellen Warren -------------------------------------- Notary Public of the State of New York 35 SCHEDULE A-1 Casino Land TRACT #1: BEGINNING at a point, in the Easterly line of Illinois Avenue, distant 350 feet Southwardly from the Southerly line of Pacific Avenue; and extending thence (1) Eastwardly, parallel with Pacific Avenue 151 feet to the Westerly line of Mt. Vernon Avenue; thence (2) Southwardly, in and along the said Westerly line of Mt. Vernon Avenue, 50 feet; thence (3) Westwardly, parallel with Pacific Avenue, 151 feet to the Easterly line of Illinois Avenue; thence (4) Northwardly, in and along the said Easterly line of Illinois Avenue, 50 feet to the place of BEGINNING. BEING KNOWN AS Part of Lot 10 in Block 48, formerly known as part of Lot 191 in Block 26, as shown on the Tax Map of the City of Atlantic City. Illinois Avenue now known as Dr. Martin Luther King Boulevard. TRACT #2: BEGINNING at a point in the Easterly line of Illinois Avenue 400 feet South of Pacific Avenue, and extending thence (1) Eastwardly, parallel with Pacific Avenue, 151 feet to the Westerly line of Mt. Vernon Avenue; thence (2) Southwardly, along same 50 feet; thence (3) Westwardly, parallel with Pacific Avenue, 151 feet to the Easterly line of Illinois Avenue; thence (4) Northwardly, along same 50 feet to the BEGINNING. BEING KNOWN AS Part of Lot 10 in Block 48, formerly known as part of Lot 191 in Block 26, as shown on the Tax Map of the City of Atlantic City. Illinois Avenue now known as Dr. Martin Luther King Boulevard. TRACT #3: BEGINNING at a point in the Westerly line of Kentucky Avenue (50 feet wide), said point being distant 200.00 feet South of the Southerly line of Pacific Avenue (60 feet wide); and extending from said beginning point the following courses and distances: (1) South 27 degrees 28 minutes 00 second East, in and along the Westerly line of Kentucky Avenue, a distance of 50.00 feet to a point; thence (2) South 62 degrees 32 minutes 00 seconds West, parallel with Pacific Avenue, a distance of 180.00 feet to the Easterly line of Mt. Vernon Avenue (19 feet wide); thence (3) North 27 degrees 28 minutes 00 seconds West, in and along the Easterly line of Mt. Vernon Avenue, a distance of 50.00 feet to a point; thence (4) North 62 degrees 32 minutes 00 seconds East, parallel with Pacific Avenue, a distance of 180.00 feet to the point and place of BEGINNING. BEING KNOWN AS Part of Lot 10 in Block 49, formerly known as part of Lot 192 in Block 26, as shown on the Tax Map of the City of Atlantic City. TRACT #4: BEGINNING at a point in the Easterly line of Mt. Vernon Avenue (19 feet wide), said point being distant 250.00 feet South of the Southerly line of Pacific Avenue (60 feet wide); and extending from said beginning point the following course and distances: (1) North 62 degrees 32 minutes 00 seconds East, parallel with Pacific Avenue, a distance of 30.00 feet to a point; thence (2) South 27 degrees 28 minutes 00 seconds East, parallel with Mt. Vernon Avenue, a distance of 50.00 feet to a point; thence (3) South 62 degrees 32 minutes 00 seconds West, parallel with Pacific Avenue, a distance of 30.00 feet to the Easterly line of Mt. Vernon Avenue; thence (4) North 27 degrees 28 minutes 00 seconds West, in and along the Westerly line of Mt. Vernon Avenue, a distance of 50.00 feet to the point and place of BEGINNING. BEING KNOWN AS Part of Lot 10 in Block 49, formerly known as Part of Lot 192 in Block 26, as shown on the Tax Map of the City of Atlantic City. 37 TRACT #5: BEGINNING in the Westerly line of Kentucky Avenue, 250 feet Southwardly from Pacific Avenue; and extending thence (1) Westwardly, parallel with Pacific Avenue, 150 feet; thence (2) Southwardly, parallel with Kentucky Avenue, 50 feet; thence (3) Eastwardly. parallel with Pacific Avenue, 150 feet to the Westerly line of Kentucky Avenue; thence (4) Northwardly, in and along same 50 feet to the point and place of BEGINNING. BEING KNOWN AS Part of Lot 10 in Block 49, formerly known as Part of Lot 192 in Block 26, as shown on the Tax Map of the City of Atlantic City. TRACT #6: BEGINNING at a point in the Westerly line of Kentucky Avenue 300 feet Southwardly from the Southerly line of Pacific Avenue; and extending thence (1) Westwardly, parallel with Pacific Avenue, 180 feet; thence (2) Southwardly, parallel with Kentucky Avenue, 50 feet; thence (3) Eastwardly, parallel with Pacific Avenue, 180 feet to the Westerly line of Kentucky Avenue; thence (4) Northwardly, along same, 50 feet to the place of BEGINNING. BEING KNOWN AS Part of Lot 10 in Block 49, formerly known as Part of Lot 192 in Block 26, as shown on the Tax Map of the City of Atlantic City. TRACT #7: BEGINNING at a point in the Westerly line of Kentucky Avenue (50 feet wide) said point being distant 350.00 feet South of the Southerly line of Pacific Avenue (60 feet wide); and extending from said beginning point in the following course and distances: (1) South 27 degrees 28 minutes 00 seconds East, in and along the Westerly line of Kentucky Avenue, a distance of 91.40 feet; thence (2) South 62 degrees 32 minutes 00 seconds West, parallel with Pacific Avenue, a distance of 4.00 feet; thence (3) South 27 degrees 28 minutes 00 seconds East, parallel with Kentucky Avenue, a distance of 1.00 feet; thence 38 (4) South 62 degrees 32 minutes 00 seconds West, parallel with Pacific Avenue, a distance of 26.00 feet; thence (5) South 27 degrees 28 minutes 00 seconds East, parallel with Kentucky Avenue, a distance of 0.75 feet; thence (6) South 62 degrees 32 minutes 00 seconds West, parallel with Pacific Avenue, a distance of 16.60 feet; thence (7) South 27 degrees 28 minutes 00 seconds East, parallel with Kentucky Avenue, a distance of 10.00 feet; thence (8) South 62 degrees 32 minutes 00 seconds West, parallel with Pacific Avenue, a distance of 133.40 feet to the Easterly line of Mt. Vernon Avenue (19 feet wide); thence (9) North 27 degrees 28 minutes 00 seconds West, in and along the Easterly line of Mt. Vernon Avenue, a distance of 103.15 feet; thence (10) North 62 degrees 32 minutes 00 seconds East, parallel with Pacific Avenue, a distance of 180.00 feet to the point and place of BEGINNING. BEING KNOWN AS Part of Lot 10 in Block 49, formerly known as Part of Lot 192 in Block 26, as shown on the Tax Map of the City of Atlantic City. ALSO BEING KNOWN AS proposed Lot 119.01 in Block 26 as shown on minor subdivision plan prepared by Dennis E. Duffy Associates, dated September 26, 1985 and filed in the Atlantic County Clerk's Office on February 6, 1986 as Map #2358. TRACT #8: BEGINNING at a point in the Easterly line of Indiana Avenue (60 feet wide), said beginning point being South 27 degrees 28 minutes 00 seconds East, 200.10 feet from where the Easterly line of Indiana Avenue is intersected by the Southerly line of Pacific Avenue (60 feet wide); and extending thence (1) South 27 degrees 28 minutes 00 seconds East, in and along the Easterly line of Indiana Avenue, 305.54 feet to a point; thence (2) North 62 degrees 30 minutes 00 seconds East, parallel with Pacific Avenue 350.75 feet to a point in the Westerly line of Illinois Avenue (50 feet wide); thence (3) In said Westerly line, North 27 degrees 28 minutes 00 seconds West, 305.64 feet to a point, said point being South 27 degrees 28 minutes 00 seconds East, 200.00 feet from the point of intersection of the Westerly line of Illinois Avenue, now known as Dr. Martin Luther King Boulevard with the Southerly line of Pacific Avenue; thence (4) South 62 degrees 30 minutes 00 seconds West, parallel with Pacific Avenue and along the line of the lands formerly of the Bala Motel, 150.75 feet to a point; thence 39 (5) North 27 degrees 28 minutes 00 seconds West, parallel with Illinois and Indiana Avenue and along the line of the lands, now or late of the Bala Motel, 114.00 feet to a point; thence (6) South 62 degrees 30 minutes 00 seconds West, parallel with Pacific Avenue, 50.00 feet to a point; thence (7) South 27 degrees 28 minutes 00 seconds East, parallel with Illinois Avenue and Indiana Avenue, along the lands now or late of Midtown Motor Inn, 64.00 feet to a point; thence (8) North 62 degrees 30 minutes 00 seconds East, still in said line and parallel with Pacific Avenue 5.00 feet to a point; thence (9) South 27 degrees 28 minutes 00 seconds East, still in said line and parallel with Illinois and Indiana Avenue 50.10 to a point; thence (10) South 62 degrees 30 minutes 00 seconds West, still in said line and parallel with Pacific Avenue, 155.00 feet to the point and place of BEGINNING. SUBJECT to the easement for public right-of-way contained in deed Book 3684, page 254. BEING KNOWN AS Lot 12 in Block 47, formerly known as Lot 60 in Block 30, as shown on the Tax Map of the City of Atlantic City. Illinois Avenue now known as Dr. Martin Luther King Boulevard. TRACT #9: PARCEL A: BEGINNING at a point in the Easterly line of Mt. Vernon Avenue (19 feet wide), said point being distant 358.00 feet South of the Southerly line of Pacific Avenue (60 feet wide); and extending from said beginning point, the following courses and distances: (1) South 27 degrees 28 minutes 00 seconds East, in and along the Easterly line of Mt. Vernon Avenue, a distance of 15.15 feet: thence (2) South 62 degrees 32 minutes 00 seconds West, parallel with Pacific Avenue and crossing Mt. Vernon Avenue, a distance of 19.00 feet to the Westerly line of Mt. Vernon Avenue; thence (3) North 27 degrees 28 minutes 00 seconds West, in and along the Westerly line of Mt. Vernon Avenue, a distance of 15.15 feet; thence (4) North 62 degrees 32 minutes 00 seconds East, parallel with Pacific Avenue and crossing Mt. Vernon Avenue, a distance of 19.00 feet to the Easterly line of Mt. Vernon Avenue and the point and place of BEGINNING. 40 BEING an area above the horizontal plane of Mt. Vernon Avenue between elevation 50.00 and elevation 70.00, said elevations in reference to U.S.C. and G.S. Datum (elevation 0.00 = mean sea level). BEING KNOW AS Lot 19 in Block 49, as shown on the Tax Map of the City of Atlantic City. PARCEL B BEGINNING at a point in the Easterly line of Mt. Vernon Avenue (19 feet wide), said point being distant 432.00 feet South of the Southerly line of Pacific Avenue (60 feet wide); and extending from said beginning point the following courses and distances: (1) South 27 degrees 28 minutes 00 seconds East, in and along the Westerly line of Mt. Vernon Avenue, a distance of 18.00 feet; thence (2) South 62 degrees 32 minutes 00 seconds West, parallel with Pacific Avenue and crossing Mt. Vernon Avenue, a distance of 19.00 feet to the Westerly line of Mt. Vernon Avenue; thence (3) North 27 degrees 28 minutes 00 seconds West, in and along the Westerly line of Mt. Vernon Avenue, a distance of 18.00 feet; thence (4) North 62 degrees 32 minutes 00 seconds East, parallel with Pacific Avenue and crossing Mt. Vernon Avenue, a distance of 19.00 feet to the Easterly line of Mt. Vernon Avenue and the point and place of BEGINNING. BEING an area above the horizontal plane of Mt. Vernon Avenue between elevation 30.00 feet and elevation 50.00, said elevations in reference to U.S.C. and G.S. Datum (Elevation 0.00 = mean sea level). BEING KNOW AS Lot 20 in Block 49, as shown on the Tax Map of the City of Atlantic City. PARCEL C: BEGINNING at a point in the Easterly line of Illinois Avenue, now known as Dr. Martin Luther King Boulevard (50 feet wide), said point being distant 365.50 feet South of the Southerly line of Pacific Avenue (60 feet wide); and extending from said beginning point, the following courses and distances: (1) South 27 degrees 28 minutes 00 seconds East, in and along the Easterly line of Illinois Avenue, a distance of 15.50 feet; thence (2) South 62 degrees 32 minutes 00 seconds West, parallel with Pacific Avenue and crossing Illinois Avenue, a distance of 50.00 feet to the Westerly line of Illinois Avenue; thence (3) North 27 degrees 28 minutes 00 seconds West, in and along the Westerly line of Illinois Avenue, a distance of 15.50 feet; thence 41 (4) North 62 degrees 32 minutes 00 seconds East, parallel with Pacific Avenue and crossing Illinois Avenue, a distance of 50.00 feet to the Easterly Line of Illinois Avenue and the point and place of BEGINNING. BEING an area above the horizontal plane of Illinois Avenue between elevation 50.00 and elevation 70.00, said elevations in reference to U.S.C. and G.S. Datum (Elevation 0.00 = mean sea level). BEING KNOWN AS Lot 19 in Block 47, as shown on the Tax Map of the City of Atlantic City. Illinois Avenue now known as Dr. Martin Luther King Boulevard. 42 SCHEDULE A-2 Office Land BEGINNING at a point in the Westerly line of Kentucky Avenue (50 feet wide), distant 441.40 feet South of the Southerly line of Pacific Avenue (60 feet wide), as measured in and along the aforesaid Westerly line of Kentucky Avenue, said beginning point being in the division line between Lots 119.01 and 119.02 in Block 26 as shown on plan of minor subdivision prepared by Dennis E. Duffy Associates, Project No. 3361, dated September 26, 1985 and filed February 11, 1986, filed Map #2358, and extending from said beginning point; thence (1) South 27 degrees 28 minutes 00 seconds East, in and along the aforesaid Westerly line of Kentucky Avenue, a distance of 108.60 feet to a point in the Northerly line of Lot 13 in said Block 49; thence (2) South 62 degrees 32 minutes 00 seconds West, in and along the same and parallel with Pacific Avenue, a distance of 150.00 feet to a corner common to Lots 11, 12 and 13 in said Block 49; thence (3) North 27 degrees 28 minutes 00 seconds West, in and along the Easterly line of Lot 12 and parallel with Kentucky Avenue, a distance of 50.00 feet to the Northeasterly corner of said Lot 12; thence (4) South 62 degrees 32 minutes 00 seconds West, in and along the Northerly line of said Lot 12 and parallel with Pacific Avenue, a distance of 30.00 feet to a point in the Easterly line of Mount Vernon Avenue (19 feet wide); thence (5) North 27 degrees 28 minutes 00 seconds West, in and along same, a distance of 46.85 feet to a point in the aforesaid division line between Lots 11 and 10; thence (6) North 62 degrees 32 minutes 00 seconds East, in and along same and parallel with Pacific Avenue, a distance of 133.40 feet to a point; thence (7) North 27 degrees 28 minutes 00 seconds West, continuing in and along the said division line and parallel with Kentucky Avenue, a distance of 10.00 feet to a point; thence (8) North 62 degrees 32 minutes 00 seconds East, still in and along the said division line and parallel with Pacific Avenue, a distance of 16.60 feet to a point; thence (9) North 27 degrees 28 minutes 00 seconds West, still in and along the said division line and parallel with Kentucky Avenue, a distance of 0.75 feet to a point; thence (10) North 62 degrees 32 minutes 00 seconds East, still in and along the said division line and parallel with Pacific Avenue, a distance of 26.00 feet to a point; thence (11) North 27 degrees 28 minutes 00 seconds West, still in and along the said division line and parallel with Kentucky Avenue, a distance of 1.00 feet to a point; thence 43 (12) North 62 degrees 32 minutes 00 seconds East, still in and along the said division line and parallel with Pacific Avenue, a distance of 4.00 feet to a point in the aforesaid Westerly line of Kentucky Avenue and the point and place of BEGINNING. BEING Lot 119.02 in Block 26 as shown on plan of minor subdivision prepared by Dennis E. Duffy Associates, dated September 26, 1985, Project No. 3361, filed in the Atlantic County Clerk's Office on February 11, 1986, filed Map #2358. ALSO BEING KNOWN AS Lot 11 in Block 49, formerly known as Lot 119.02 in Block 26, as shown on the Tax Map of the City of Atlantic City. 44 SCHEDULE A-3 Expansion Land Tract # 1 ALL THAT CERTAIN LOT, tract or parcel of land and premises situate, lying and being in the City of Atlantic City, County of Atlantic and State of New Jersey, bounded and described as follows: BEGINNING at a point in the Easterly line of Illinois Avenue (50' wide), distant 200.00' South of the Southerly line of Pacific Avenue (60'wide), when measured in and along the said Easterly line of Illinois Avenue, and extending from said beginning point; thence (1) North 62 degrees 32 minutes 00 seconds East, parallel with Pacific Avenue, a distance of 151.00' to a point in the Westerly line of Mount Vernon Avenue (19' wide); thence (2) South 27 degrees 28 minutes 00 seconds East, in and along the same, a distance of 45.00' to a point; thence (3) South 62 degrees 32 minutes 00 seconds West, parallel with Pacific Avenue, a distance of 151.00' to a point in the Easterly line of Illinois Avenue; thence (4) North 27 degrees 28 minutes 00 seconds West, in and along same, a distance of 45.00' to the point and place of BEGINNING. BEING KNOWN AS Lot 8 in Block 48, formerly known as Lot 117 in Block 26, as shown on the Tax Map of the City of Atlantic City. Illinois Avenue now known as Dr. Martin Luther King Boulevard. And subject to Ordinance No. 1994-95 of the City of Atlantic City. Tract # 2 All that certain Land and Premises, Tract or Parcel, situate in the City of Atlantic City, County of Atlantic County and State of New Jersey, bounded and described as follows: Beginning in the Northwesterly Line of Pacific Avenue (60 Ft. Wide) at a point that is 150.75 Feet Northeastwardly of the Northeasterly Line of Indiana Avenue (50 Ft. Wide) and extending thence by N.J.P.C.S. MERIDIAN: (1) North 27 degrees 40 minutes 05 seconds West, at right angles to Pacific avenue, 150.00 Feet; thence (2) North 62 degrees 19 minutes 55 seconds East, parallel with Pacific Avenue, 50.00 Feet; thence 45 (3) South 27 degrees 40 minutes 05 seconds East, at right angles to Pacific Avenue, 150.00 Feet to the first mentioned Northwesterly Line of Pacific Avenue; thence (4) South 62 degrees 19 minutes 55 seconds West, along said Northwesterly Line of Pacific Avenue, 50.00 Feet to the POINT AND PLACE OF BEGINNING. Being known as Lot 29, Block 156, formerly Lot 27, Block 33, on the Tax Map of the City of Atlantic City. Tract # 3 ALL THAT CERTAIN LOT, tract or parcel of land and premises situate, lying and being in the CITY OF ATLANTIC CITY, County of ATLANTIC and State of New Jersey, bounded and described as follows: BEGINNING in the Southeasterly line of Pacific Avenue (60 feet wide) at a point that is 50.75 feet Southwestwardly of the Southwesterly line of Dr. Martin Luther King Jr. Boulevard (50 feet wide) and extending thence by N.J.P.C.S. MERIDIAN: (1) South 27 Degrees 40 minutes 05 seconds East, parallel with Dr. Martin Luther King Jr. Boulevard, 100.00 feet; thence (2) South 62 degrees 19 minutes 55 seconds West, parallel with Pacific Avenue, 50.00 feet; thence (3) North 27 degrees 40 minutes 05 seconds West, parallel with Dr. Martin Luther King Jr. Boulevard, 100.00 feet to the first mentioned Southeasterly line of Pacific Avenue; thence (4) North 62 degrees 19 minutes 55 seconds East, along said Southeasterly line of Pacific Avenue, 50.00 feet to the POINT AND PLACE OF BEGINNING. BEING Lot 7 in Block 47, formerly known as Lot 14 in Block 30, as shown on the Tax Map of the City of Atlantic City. Tract # 4 ALL THAT CERTAIN LOT, tract or parcel of land and premises situate, lying and being in the CITY of ATLANTIC CITY County of ATLANTIC and State of New Jersey, bounded and described as follows: 46 TRACT A BEGINNING at a point in the Southeasterly line of Pacific Avenue (60 feet wide), said point being distant 100.75 feet Southwestwardly from the intersection of the said line of Pacific Avenue with the Southwesterly line of Illinois Avenue (50 feet wide), said point being corner to lands of the former White Tower; thence (1) Southwestwardly along said Pacific Avenue a distance of 100 feet to corner of lands formerly of the Mid Town Motor Inn, said point being distant 150 feet Northeastwardly from the Northeasterly line of Indiana Avenue; thence (2) Southeastwardly parallel with Indiana Avenue (60 feet wide) a distance of 86 feet to a point; thence (3) Northeastwardly parallel with Pacific Avenue a distance of 50 feet to a point; thence (4) Southeastwardly parallel with Illinois Avenue a distance of 114 feet to a point; thence (5) Northeastwardly parallel with Pacific Avenue a distance of 150.75 feet to the Southwesterly line of Illinois Avenue; thence (6) Northwestwardly along the Southwesterly line of Illinois Avenue a distance of 100 feet to a point; thence (7) Southwestwardly parallel with Pacific Avenue a distance of 100.75 feet to a point; thence (8) Northwestwardly parallel with Illinois Avenue a distance of 100 feet to the Southwesterly line of Pacific Avenue to the point and place of BEGINNING. The above description is in accordance with a survey drawn by Arthur W. Ponzio Co. and Associates dated November 7, 1984 and revised November 23, 1984, January 7, 1985, July 11, 1985, July 12, 1985 and August 5, 1985. BEING KNOWN AS Lots 4, 5, 6, 9 and 10 in Block 47, formerly known as Lots 2, 3, 16, 42 and 19 in Block 30, on the Tax Map of the City of Atlantic City. Illinois Avenue now known as Dr. Martin Luther King Boulevard. TRACT B BEGINNING at the intersection of the Southeasterly line of Pacific Avenue (60 feet wide) with the Northeasterly line of Indiana Avenue (60 feet wide); thence (1) Northeastwardly along the Southeasterly line of Pacific Avenue a distance of 150 to a point corner to lands formerly of the Bala Motel; thence (2) Southeastwardly along said lands and extensions thereof and parallel with Indiana Avenue a distance of 150 feet to a point; thence 47 (3) Southwestwardly parallel with Pacific Avenue a distance of 150 feet to the Northeasterly line of Indiana Avenue; thence (4) Northwestwardly along the Northeasterly line of Indiana Avenue a distance of 150 feet to the point and place of BEGINNING. The above description is in accordance with a survey drawn by Arthur W. Ponzio Co. and Associates dated November 7, 1984 and revised July 11, 1985, August 5, 1985 and August 6, 1985. BEING Lots 1, 2 and 3 in Block 47, formerly known as Lots 5, 6 and 7 in Block 30, as shown on the Tax Map of the City of Atlantic City. TRACT C BEGINNING at a point on the Northerly sideline of Pacific Avenue, said point being 100.75 feet Northeast from the intersection of the Northerly sideline of Pacific Avenue and the Easterly sideline of Indiana Avenue (said point also being 250.00 feet West of Illinois Avenue) and running thence; (1) North 27 degrees 28 minutes 00 seconds West 150.00 feet to a point; thence (2) South 62 degrees 32 minutes 00 seconds West 0.75 feet to a point; thence (3) North 27 degrees 28 minutes 00 seconds West parallel with Indiana Avenue, 25 feet to a point; thence (4) North 62 degrees 32 minutes 00 seconds East 50.00 feet to a point; thence (5) South 27 degrees 28 minutes 00 seconds East 25.00 feet to a point; thence (6) North 62 degrees 32 minutes 00 seconds East 0.75 feet to a point; thence (7) South 27 degrees 28 minutes 00 seconds East 150.00 feet to the point; thence (8) South 62 degrees 32 minutes 00 seconds West 50.00 feet to a point and the place of BEGINNING. The above description is in accordance with a survey drawn by Arthur W. Ponzio Co. and Associates dated November 7, 1984 and revised July 11, 1985, July 12, 1985 and August 5, 1985. BEING KNOWN AS Lot 31 in Block 156, formerly known as Lot 73 in Block 33, as shown on the Tax Map of the City of Atlantic City. Illinois Avenue now known as Dr. Martin Luther King Boulevard. TRACT # 5 48 ALL THAT CERTAIN LOT, tract or parcel of land and premises situate, lying and being in the City of Atlantic City, County of Atlantic and State of New Jersey, bounded and described as follows: BEGINNING in the Northeasterly line of Indiana Avenue (60 feet wide) at a point 150 feet Southeastwardly of the Southeasterly line of Pacific Avenue (60 feet wide); and extending thence (1) North 62 degrees 32 minutes East, parallel with Pacific Avenue, 155 feet; thence (2) South 27 degrees 28 minutes East, parallel with Indiana Avenue, 50.10 feet; thence (3) South 62 degrees 32 minutes West, parallel with Pacific Avenue 155 feet to the first mentioned Northeasterly line of Indiana Avenue; thence (4) North 27 degrees 28 minutes West, along same, 50.10 feet to the point and place of BEGINNING. BEING KNOWN AS Lot 11 in Block 47 as shown on the current tax map of the City of Atlantic City. 49 SCHEDULE A-4 Easement EASEMENT I DESCRIPTION FOR EASEMENT FOR THE PEOPLEMOVER SYSTEM TOGETHER WITH SUPPORTING COLUMNS ON INDIANA AVENUE. BEGINNING at a point in the Westerly line of Indiana Avenue (60 feet wide), said point being distant 342.00 feet South of the Southerly line of Pacific Avenue (60 feet wide), and extending from said beginning point; thence (1) North 62 degrees 32 minutes 00 seconds East, parallel with Pacific Avenue a distance of 10.00 feet; thence (2) South 27 degrees 28 minutes 00 seconds East, parallel with Indiana Avenue a distance of 94.00 feet; thence (3) North 62 degrees 32 minutes 00 seconds East, parallel with Pacific Avenue a distance of 50.00 feet to the Easterly line of Indiana Avenue; thence (4) South 27 degrees 28 minutes 00 seconds East, in and along the Easterly line of Indiana Avenue, a distance of 30.00 feet: thence (5) South 62 degrees 32 minutes 00 seconds West, parallel with Pacific Avenue a distance of 50.00 feet; thence (6) South 27 degrees 28 minutes 00 seconds East, parallel with Indiana Avenue a distance of 498.90 feet; thence (7) South 62 degrees 32 minutes 00 seconds West, parallel with Pacific Avenue a distance of 10.00 feet to the Westerly line of Indiana Avenue; thence (8) North 27 degrees 28 minutes 00 seconds West, in and along the Westerly line of Indiana Avenue, a distance of 622.90 feet to the point and place of BEGINNING. The above described Easement is located over and along the right of way of Indiana Avenue. It is understood that the above description is for an elevated peoplemover system, together with supporting columns on Indiana Avenue and for an elevated pedestrian passageway or bridge connecting the peoplemover system to the Claridge and to the Sands respectively. It is further understood that the bottom of said easement shall be located at elevation 20, mean sea level datum and the top of said easement shall be at elevation 45.0. 50 EASEMENT II DESCRIPTION OF A PEOPLEMOVER SYSTEM ENTRANCE AND MUSEUM AT THE BOARDWALK END OF INDIANA AVENUE. ALL THAT CERTAIN LOT, tract, or parcel of land and premises situate, lying, and being in the city of Atlantic City, County of Atlantic, and State of New Jersey, bounded and described as follows: BEGINNING at a point distant 946.90 feet South of the Southerly line of Pacific Avenue (60 feet wide) and 26.00 feet West of the Westerly line of Indiana Avenue (60 feet wide), when measured at tight angles to said avenues respectively, and extending from said beginning point; thence (1) North 62 degrees 32 minutes 00 seconds East, parallel with Pacific Avenue a distance of 62.00 feet; thence (2) South 27 degrees 28 minutes 00 seconds East, parallel with Indiana Avenue a distance of 59.37 feet to the Inland or Interior Line of Public Park; thence (3) South 77 degrees 07 minutes 07 seconds West, in and along the Inland or Interior Line of Public Park, a distance of 64.06 feet; thence (4) North 27 degrees 28 minutes 00 seconds West, parallel with Indiana Avenue a distance of 43.23 feet to the point and place of BEGINNING. The above described easement is located partly in the right of way of Indiana Avenue and partly on Lot 5, Block 46 as shown on the Tax Map of the City of Atlantic City. It is understood that the above description is for the Museum and Peoplemover System entrance area at the Boardwalk end of Indiana Avenue. 51 SCHEDULE A-5 Leasehold Estate - Madison House Lease ALL THAT following lands located in the City of Atlantic City, County of Atlantic and State of New Jersey, bounded and described as follows: BEGINNING at a point in the Easterly line of Illinois Avenue 245 feet South 27 degrees 28 minutes East from the Southerly line of Pacific Avenue; and extending thence (1) North 62 degrees 32 minutes East, parallel with Pacific Avenue 151 feet to the Westerly line of Mount Vernon Avenue; thence (2) South 27 degrees 28 minutes East, in and along the Westerly line of Mount Vernon Avenue 105 feet; thence (3) South 62 degrees 32 minutes West, parallel with Pacific Avenue 151 feet to the Easterly line of Illinois Avenue; thence (4) North 27 degrees 28 minutes West, in and along the Easterly line of Illinois Avenue 105 feet to the point and place of beginning. BEING Lot 9, Block 48 on the Official Tax Map of Atlantic City. 52 Schedule B Permitted Encumbrances 1. Permitted Liens as defined in the Indenture. 2. All those certain encumbrances listed on Schedule B - Section II of that certain ALTA Loan Policy No. 1021671060, issued by the Title Company of Jersey, as agent for Stewart Title Guaranty Company, dated June 22, 2004. 3. The terms of a lease, license or management agreement(s) with an energy management company(s), supplier(s), or intermediary(s) related thereto now or hereafter entered into concerning or with respect to the supply and/or management of utility services and/or the operation of existing or newly supplied equipment at the property, including, but not limited to heating, ventilation, and air-conditioning and energy production related equipment. 4. That certain unrecorded Lease Agreement for Lot 29 in Block 156 between Mortgagor as Landlord, and T&M Parking, Inc., as Tenant, dated March 20, 1996, having a month-to-month term. 5. That certain License Agreement by and between Mortgagor and Eva Daush, d/b/a Sansations Hair Salon, dated April 28, 1999, and amended March 15, 2000, for a term to expire September 15, 2000, and to be renewed upon substantially the same terms. 6. That certain License Agreement by and between Mortgagor and 21st Century Hot Dogs, LLC, dated May 16, 2003, for a term of three (3) years. 53 -----END PRIVACY-ENHANCED MESSAGE-----